Roundup: Meralco saves Philippine shares from another bloody trading on Monday

The Philippine market avoided another bloody trading, after shares of its largest power distributor - Manila Electric Co. - started climbing before the session ended.

The bellwether Philippine Stock Exchange index rallied 0.32 percent or 9.38 points to settle at 2,932.20 on Monday, while the all share index went up by 0.35 percent or 6.53 points to 1,853.59.

Three of the six subsector indices slipped. Industrial shares - where Meralco belongs - was the biggest gainer after it went up by 1.98 percent or 84.42 points to 4,34.76. The service sector on the other hand shed the most, losing 0.88 percent or 13.37 points to 1, 491.02.

The trading volume remains within average where some 1.09 billion shares valued at 2.24 billion pesos (48.22 million U.S. dollars) were exchanged. Foreign investors were net buyers at 94. 59 million pesos (2.03 million U.S. dollars).

Market breadth was negative where 58 stocks lost their value while 43 were unchanged and 65 did not move.

"The Philippine stocks' late rally was fueled by a sudden run up in the stock price of the Meralco. [Because of the company], the local market closed a volatile trading session in the green," local brokerage AB Capital Securities, Inc. said.

The brokerage house said the gains of the local market went against the "corrective trend" prevailing in the major bourses abroad. Wall Street's bellwether, the Dow Jones Industrial Average, for instance, fell below 10,000 last Friday after some major companies in the U.S. reported disappointing earnings results.

After staying out of the limelight for more than three months, shares of Meralco surged anew on Monday on reports that the local unit of Hong Kong-based First Pacific Co. Ltd. wants to increase its stake further.

Meralco went up by 6.56 percent or 13 pesos (0.27 U.S. dollars) to finish at 211 pesos (4.54 U.S. dollars) on Monday. It was the most actively traded stock and was also the eight out of the 261 listed companies that gained the most. After cornering 15.11 percent of the market's transaction, Meralco contributed 13 positive points to the main index.

Hence, it countered the profit takers that took over the market. Prior to the rally for instance, the local market was already trading in the red and even touched the low of 2,911.10 or 11 points down from Friday's closing.

Meralco has been the subject of battle for control between the Pangilinan group and Southeast Asia's largest food and beverage giant San Miguel Corp. The Pangilinan group, through units Metro Pacific Investments Corp. (the local unit of First Pacific) and telecommunication company Pilipino Telephone Corp., now holds a 34. 7 percent stake in Meralco.

Meanwhile, San Miguel holds a 27 percent stake and has been rumored to have allied with another influential businessman - the Ongpin group - for another 11 percent stake in the power distributor. The Lopez family - one of Philippines oldest oligarchs - has the other 13 percent stake.

With San Miguel and Metro Pacific openly disclosing their interests to secure a majority stake, retail investors have been flocking Meralco shares with the hope of being bought out by one of the camps should it breach the 35 percent tender offer cap.

Analysts however have already warned investors not to immediately react on any news as both camps might evade the tender offer requirement.

But with no major domestic leads, AB Capital Securities said the Philippine market is expected to continue following the developments abroad.

"In the absence of a major market event, the composite index is seen to stay within the range of between 2,900 to 3,000," AB Capital said.

Most blue chips closed in the green while heavyweight Philippine Long Distance Telephone Co. shed 0.96 percent to close at 2,565 pesos (55.22 U.S. dollars) apiece.

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