By Justine Irish D. Tabile
THE stock market operator is reviewing whether PLDT Inc. adequately and timely disclosed material information after its shares slumped on Dec. 16 right before its disclosure of a big budget overrun.
“We’re a little concerned with the impact as the confidence of investors in the stock market has been seriously affected considering that the PLDT is one of the biggest index stocks,” Ramon S. Monzon, Philippine Stock Exchange (PSE) president and chief executive officer, told BusinessWorld in a recent interview.
He said it was important for the PSE to look into the PLDT issue because of its impact on the market.
“The question that comes to my mind is should they have disclosed earlier or not? Is their disclosure adequate or not? We are having them clarify things because for us, if [the issue] was being investigated for more than a month, at least let people know about the problem,” he added.
On Dec. 16, shares in PLDT plunged by 4.09% to P1,478 apiece just before the company disclosed its P48-billion budget overrun, which it uncovered through an internal investigation.
PLDT shares continued their decline the following week, slumping by 19.35% on Dec. 19 to P1,192 and by 0.17% to P1,190 on Dec. 20.
“PLDT started its decline as early as Dec. 12. I think that was just due to a simple technical correction. It closed the week prior in the green,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
“The news of the budget overruns that triggered a management revamp just spooked investors and exacerbated the sell-off,” he added.
“There were already negative speculations running around the market after the stock closed at P1,541 on Dec 15, 11% lower than Friday’s close of the previous week,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.
“Looking at the charts, PLDT was already in its fourth day of consecutive declines prior to Dec. 16 and this may have prompted traders to trim their exposure while they search for clues that may explain the fuss about the company,” Mr. Temporal added.
Shares in PLDT managed to regain their footing on Dec. 20 after gaining 5.04% to P1,250 each.
“It may take a while for confidence in its local shares to return, as evidenced by continuous net foreign selling. But, yes, it has recovered a bit of its market price and PLDT remains to be a reputable company. Its stock price is just finding new footing,” Mr. Arce said.
PLDT held a special investors’ briefing on Dec. 21, in which it addressed its elevated capital expenditure (capex).
“The special briefing that PLDT held last week was able to ease the clamor but there are still a lot of questions left unanswered and management has yet to come up with the final figure for the so-called [capex] overrun,” Mr. Temporal said.
“Given these, we expect the market to remain uneasy on PLDT and volatility to persist. At this moment, fundamentals — attractive industry structure, rosy revenue outlook, etc. — are unlikely to be appreciated in the market amid the whole fiasco and I think the company would need to make drastic management shake-ups before we see an adequate recovery in market confidence,” he added.
Meanwhile, Mr. Arce said that the company did its due diligence and ended up regaining some part of its stock price that got wiped out in Monday’s sell-off.
“Before PLDT could issue an official statement, it first had to understand the range of issues involved and the extent of the matter even as there were rumors already circulating. Until the information was complete, any announcement would have been premature, to the detriment of the public shareholders,” he added.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.