By Arra B. Francia, Senior Reporter
LOCAL SHARES fell on Wednesday mainly due to the sell-off in index heavyweight Jollibee Foods Corp. (JFC) following its acquisition of California-based The Coffee Bean and Tea Leaf (CBTL).
The benchmark Philippine Stock Exchange index (PSEi) plunged 1.09% or 89.97 points to close at 8,161.49. The broader all-shares index dropped 0.69% or 34.71 points to 4,956.24.
“It’s the negative sentiment in JFC today that pulled the market lower. Although the acquisition of CBTL was good news, the latter’s 2018 bottomline performance was at a loss of $21 million which is equivalent to approximately 12 or 13% of JFC’S profit,” Timson Securities, Inc. Equity Trader Jervin S. de Celis said in a mobile phone message on Wednesday.
JFC announced Wednesday it will acquire CBTL for a total of $350 million, which is seen to expand its total store network by 26%. It will also add 14% to JFC’s global systemwide sales.
Shares in JFC plunged 7.99% or P21.80 to P251 each at the stock exchange yesterday, making it the day’s most actively traded stock.
Mr. De Celis noted that it is unusual for blue-chip stocks to drop by more than five percent on a single day, causing panic selling among investors.
“But this might just be a short term reaction. JFC is backed by an excellent management team so CBTL is in good hands,” he said.
Aside from JFC’s acquisition of CBTL, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said investors also factored in the International Monetary Fund’s (IMF) downward revision of its growth projections.
“Shares traded in the red with news that the IMF revised downward its growth figures. The IMF cut its global growth outlook again and suggested that policy “missteps” on trade and Brexit could derail a projected rebound,” Mr. Limlingan said in a mobile phone message.
The IMF expects the world economy to expand by 3.2% and 3.5% in 2019 and 2020, respectively. The projections are both lower by 0.1% compared to expectations in April due to continuing trade tensions.
Foreign investors turned sellers after eight straight days of net buying, recording P542.01 million in net sales against the previous session’s net inflows worth P45.64 million.
All sectoral indices ended in the red except for the services counter, which climbed 0.3% or 5.09 points to 1,660.34.
Industrials lost 1.86% or 218.36 points to 11,501.78; financials plunged 1.4% or 26.19 points to 1,842.69; holding firms went down 0.89% or 71.31 points to 7,924.89; property declined 0.67% or 29.57 points to 4,359.56; while mining and oil slipped 0.53% or 43.24 points to 8,087.45.
Some 2.89 billion issues valued at P6.44 billion switched hands, slightly lower than Wednesday’s P6.72 billion.
Decliners outpaced advancers, 125 to 73, while 57 names were unchanged.