ABS-CBN shares tank on first two days back to trade

The market value of ABS-CBN Corp. was slashed by half on the company's first two days back on trading, surpassing even a dive on the bigger equity market that touched its lowest point on more than a month on Friday.

ABS-CBN shares plummeted a further 26.4% to close the week at P7.64 apiece, following a 29.9% slump on Thursday when it resumed trading. On July 10, just before the network’s trading was halted for nearly two weeks, ABS-CBN shares were worth P14.78 each.

Analysts said there is no end in sight just yet for the Lopez-led network, which ultimately lost its battle for a fresh 25-year franchise with the House of Representatives dominated by President Rodrigo Duterte’s allies.

For them, the next battleground for ABS-CBN is to prove the network can survive without its main revenue stream.

“Eventually it [the drop] will plateau once there are more news coming from the company, what are their plans going forward,” said Astro del Castillo, managing director at First Grade Holdings Inc.

That information on business plans was already provided by the media giant in compliance with Philippine Stock Exchange rules to give investors an idea of how the network would proceed on operating with 50% of consolidated revenues virtually erased from its balance sheet without a new broadcasting license.

However, Del Castillo said ABS-CBN’s disclosure of a focus on digital may not be enough to convince an already jittery market, for now. “Number 1, the financial markets are being siphoned off by initial public offerings and bond offerings. There are other options,” he said.

“Most investors would opt to sit it out on the revenue stream. They are awaiting for a more consistent revenue stream,” he said by phone.

PSEi drops ahead of eventful week
While bigger in scale, ABS-CBN was not alone in tanking the end of the week in the local market. Ahead of a crucial week, the benchmark index opened weaker than Thursday and hit an intra-day low of 5,968.72. In the end, PSEi managed to reverse some losses to close at 6,003.26, down 0.43%.

The broader all-shares index likewise ended in the red, retreating 0.20% to 3,533.01.

Apart from a decision on new 15-day quarantine regimes, where Metro Manila is at risk of sliding down to stricter restrictions, Piper Chaucer Tan, research associate at Philstocks Financial Inc., said investors would pierce through Duterte’s penultimate State of the Nation Address (SONA) on Monday for guidance.

“The market right now has been on a decisive stance to wait and see what will happen to the quarantine measures as this is one of the indicators on how the economy will restart and how long the recovery of the economy,” Piper Chaucer Tan, research associate at Philstocks Financial Inc., said in a text message.

Luis Limlingan, managing director at Regina Capital brokerage, agreed, adding that the local market followed a bearing Wall Street on Friday due to US jobless claims. “Local shares fell after the first weekly increase in new unemployment claims since March and a renewed wave of mandated lockdowns raised concerns of further economic slowdown,” he said in a market commentary.

Tan said depending on what the SONA provides, which is said to contain the government’s recovery plan, PSEi is due to move either way next week. 

“For the trading range for next week, we expect the market to hold the strong psychological support of 6,000, but if the quarantine measures will revert to stricter measures, then we expect the market to fall down at 5,400 levels and resistance for the market is pegged at 6,400,” he added.

Source: Ian Nicolas Cigaral (Philstar.com)

Source: Peso Economics