Market chill makes dancing frenzy for the wise investor

By ZOSIMO T. LITERATUS
Zeitgeber LC, Investments Division

The drop in the share prices yesterday might be an alarming one but such plunge in market value was concentrated to only a few companies traded in the Philippine Stock Exchange with more than half of the listed stocks were simply left out in the cold without bidding movements.

In the Financials, only 12 of 29 companies (about 41 percent) suffered price drops, almost equally spread among banks and other financial institutions. Fourteen out of 47 Industrials take price plunges, representing almost 30 percent of those listed in the group.

Only eight of 36 holding companies suffered the cut in market prices, while the Properties dipped almost 24 percent.

Listed Service companies neither suffered more with only nine out of 38 companies (23.7 percent) got bid downward. Mining and oil companies took the cut in six of 26 (23 percent).

The 12.3% price plunge was an average that indicated certain companies took a bigger spiral in market displeasure.

But for investors who know the better companies among the many of lesser make, the spiral should find them waiting with a lot of cash to buy in. A few select companies are simply priced right now almost for a song. And a wise investor should know that it is time to sing. If Warren Buffett knows about this, he could dance with frenzy.

Share prices plunge 12.3%; trading halted temporarily

By KRISTINE JANE R. LIU

Business World

The Philippine stock market saw one of its worst days yesterday as share prices fell by a record 12.3%, triggered by investor fears that a global recession is inevitable.

The plunge — the biggest one-day percentage drop since the bourse was unified — forced officials to temporarily halt trading, also a first for the Philippine Stock Exchange (PSE).

The "circuit breaker rule" was imposed after the main index fell by 10%. The 15-minute breather did little to prevent further drops as the main index closed at 1,713.8, down 239.7 points. It was the biggest one-day point drop since February 2007.

The total value of all 241 firms listed on the PSE was P7.98 trillion at the start of the year. As of yesterday this was down to P4.75 trillion.

"Basically this is investor concern over the income of the country’s financial institutions. The effect of the global situation ... is being considered and [investors] are worried about our banking sector," said Harry G. Liu, president of Summit Securities, Inc. Check for details...

Central banks slashing rates as investors flee

By ANTHONY FAIOLA & NEIL IRWIN

MSNBC

Central banks around the world are moving to further slash interest rates as they seek to contain the damage from the bursting of the biggest credit bubble in history.

The Federal Reserve is poised to cut its benchmark rate for the second time in two weeks at a pivotal meeting in Washington on Wednesday, and the European Central Bank yesterday suggested that it would do the same next week. South Korea announced a dramatic rate cut yesterday, by three-fourths of a percentage point.

Governments worldwide have already approved massive bailouts and stimulus packages to halt financial meltdowns. But the trouble spots in the United States and abroad continue to multiply. Yesterday, there were growing signs that the U.S. Treasury Department was close to extending its $700 billion rescue program to cover the ailing auto industry.

Analysts said governments are trying to manage what has become the biggest threat to the global financial system -- a massive pullout by panicked investors from any holding they see as remotely risky. From consumers to multibillion-dollar hedge funds, investors are cashing out to cover losses or guard against further damage by moving into safe havens such as U.S. Treasurys.

Rate cuts, however, are not packing their usual punch. Normally, when central banks cut rates, it becomes cheaper for businesses and consumers to borrow money. But now, with banks and other financial institutions experiencing a severe crisis, lenders have been reluctant to extend credit at any price.

The pullback by investors, known as deleveraging, is extending massive losses on global stock markets; the Hong Kong stock market on Monday had its biggest one-day percentage drop since 1989, and Tokyo's Nikkei fell to its lowest level in 26 years. Check for details...

Ten Companies Failed the Free-Float Test

By ZOSIMO T. LITERATUS

Morningsun Press Agency

Ten publicly-traded companies failed to pass the cut for the free float criteria set by the Philippine Stock Exchange, which is ten percent of the outstanding company’s stocks listed in the local bourse. The figures will be used to update the free float levels of all listed companies effective October 10. Free float refers to the issued and outstanding shares of a listed company that are not held by strategic partners and owners. Hence, it is an indicator of the tradability of the company, assuring investors sufficient volume of stocks that can be traded anytime.

Listed companies that failed the free-float cut are credit card provider Bankard (BKD: 8.0%), Canada-based life insurance providers Manulife Financial (MFC: 1.2%) and Sun Life Financial (SLF: 2.4%), cement manufacturer Republic Cement (RCM: 7.5%), residential property and industrial park developers Filinvest Land (LND: 5.6%) and its parent (holding) Filinvest Development (FDC: 7.8%), multi-use property developer Philippine Estates (PHES: 5.2%), plastic manufacturer Wellex Industries (WIN: 0.3%), third largest cellular phone provider Pilipino Telephone (PLTL: 7.8%), and airline operator PAL Holdings (PAL: 2.3%). The updated levels will figure out in the computation of free float shares of companies included in the PSE index (PSEi) and the sector indices.

Last week, the bourse announced the reconstitution of its indices based on the trading activity of listed companies from July 1, 2007 to June 30, 2008. Three companies in the PSEi will be replaced while eight companies join the sector indices after 17 others were removed. This new compositions of the PSE indices will take effect on November 14.

Broadcasting giant ABS-CBN Broadcasting, conglomerate Alliance Global Group, and oil-refining giant Petron join the 30-company PSEi to replace nation’s leading cement manufacturer Holcim Philippines, food and beverage giant JG Summit Holdings, and commercially licensed Philippine National Bank.

The Financial Index will drop in membership from 17 to 15 as three companies—Asia Trust Development Bank, Export and Industry Bank, and Manulife Financial Corporation—drop out and large global remittance provider I-Remit enters.

The Industrial Index will also reduce its roll from 23 to 22 with the exit of food and beverage standout Ginebra San Miguel, Republic Cement, steel fabricator TKC Steel, and paper producer PICOP Resources exit. The companies—newly listed Aboitiz Power, Davao-based oil business Phoenix Petroleum Philippines, and newly-listed cosmetics company Splash—take the open slots.

The Holding Firms Index is adding Lodestar Investment Holdings after the removal of A Soriano, House of Investments, Prime Orion Philippines, and Unioil Resources & Holdings.

The Services Index will roll in newly listed broadcaster GMA Network Inc. Three companies were removed at the same time: Asia Terminals, Boulevard Holdings, and PAL Holdings.