The local bourse slipped on Thursday on profit-taking amid confusion about the unexpected rejection of the arbitration claim of Manila Water Co. Inc. (MWC) for an increase in water rates.
MWC filed for arbitration in 2013 after the state-owned Metropolitan Waterworks and Sewerage System (MWSS) denied both water suppliers’ applications for rate increases. Last month, a similar arbitration case involving Maynilad Water Services Inc. resulted in that concessionaire’s rate-hike petition being accepted.
The Philippine Stock Exchange index (PSEi) fell 0.37 percent, or 28.79 points to close at 7,819.04, while the wider All Shares dropped 0.21 percent, or 9.71 points to 4,547.60.
The market looked technically vulnerable to profit-taking pressure after recent gains, even though delays on the arbitration case had been expected.
April Lynn Tan, head of research at COL Financial Group Inc., said investors had digested the expected effects of further delays in the compensation for the arbitration winners, affecting the stocks of MWC and its parent Ayala Corp., as well as Maynilad’s holding firm Metro Pacific Investments Corp.
“Basically, other stocks just corrected after going up the previous all-time high. The main story today is the negative impact of the news about the arbitration of Manila Water, Maynilad and MWSS. It pulled down Manila Water, AC and MPIC stocks,” Tan said.
Asked if international markets affected the market, she said the trading was “partly lackluster” due to the US markets’ overnight decline: Dow Jones dropped 106.47 points, S&P 500 lost 9.25 points, and Nasdaq took off 12.76 points.
“The market is in for a correction in the short-term period. Technically, the market is seen going sideways because it was strong in the first few months of the year since mid-December last year. We wouldn’t be surprised if a consolidation happens,” Tan said, noting that trading will range from 7,600 to 7,800.
The mining and oil and services indices gained while the rest of the subindices declined, led by the industrial counter, which lost 1.07 percent.
Due to the negative news about the arbitration, MWC, AC and MPIC recorded the biggest losses of 10.67 percent, 0.88 percent and 4.91 percent, respectively. Other major losers were Universal Robina Corp. and Bank of the Philippine Islands.
Top gainers, on the other hand, were Philippine Long Distance Telephone Company, Megaworld Corp., BDO Unibank Inc., Semirara Mining and Power Corp. and SM Investments Corp.
Total volume was at 7 billion shares, valued at P9.09 billion. Advancers outnumbered decliners 95 to 90, while 46 issues closed unchanged.
On Wednesday, the main PSEi recorded its 18th all-time high for the year, ending with a 71.32-point gain, or 0.92 percent at 7,847.83. The wider All Shares added 32.24 points, or 0.71 percent to 4,557.31.