Investors in mining panic over Gina Lopez appointment

Chrisee Dela Paz
Stock analysts say investor jitters seen to continue until Lopez presents her mining policies

INVESTOR JITTERS. Gina Lopez's appointment as DENR head spooks the mining sector. Philippine Stock Exchange file photo

MANILA, Philippines – Share prices of mining and oil stocks in the Philippine Stock Exchange (PSE) dipped by 6.43% as of 12 noon, Wednesday, June 22 – its lowest growth rate since August 2015 – as investors panic over anti-mining advocate Gina Lopez‘s appointment as head of Department of Environment and Natural Resources (DENR).

Harry G. Liu, president of brokerage firm Summit Securities, Incorporated, said in a phone interview that the investing public was concerned over Lopez’s appointment, and that the downward trend is expected to “take a while.”

“The mining investors were definitely concerned about the incoming DENR secretary. Her statement is very clear, that she is anti-mining. This is why investors panicked. They took a cautious move by selling first their shares,” Liu told Rappler.

Mining and oil, which consists heavily of miners, lost 736.48 points, ending at 10,715.36 as of 12 noon on Thursday. This is while the PSE index is almost flat to close at 7,767.06 at the same time.

SPOOKS FINANCIAL MARKET. Data from Philippine Stock Exchange

For Justino B. Calaycay, Jr., an analyst at Philstocks Financial, Incorporated, “the slide in mining shares began with the ‘offer’ being made yesterday and continues with news of Ms. Lopez accepting the challenge.”

Sought for comment, Lopez told Rappler in a text message: “You can’t build an economy based on suffering and injustice. It isn’t right. The poorest sites in the country are mining areas.” 

This situation has “to stop,” Lopez added, “if our country is to realize the future it deserves.”

‘Negative spin’

Mining and oil was the only sectoral index among 6 that ended Tuesday, June 21 in red.

“Generally, anything that presents uncertainty stirs volatility in the market – and Ms Lopez’s well-known advocacies lent it a negative spin,” Calaycay said in an e-mail correspondence.

Bank of the Philippine Islands (BPI) associate economist Nicholas Antonio Mapa shared their findings, saying “the sell-off was linked in part to the appointment of the DENR secretary who will possibly not be as friendly to this sector.”

Although the movement of price of mining index was lower at the start of the year, Mapa pointed out that “as for growth rates, the drop was the lowest since August 2015.”

GROWTH RATE. Photo from BPI's Nicholas Mapa

 

Philex Mining Corporation led the fall, crashing 8.11% to end P7.36 per share as of 12 noon on Thursday,

Manuel V. Pangilinan, who heads both Philex Mining as chairman, shared his observations on Twitter, too.

In a 2012 conference, Pangilinan and Lopez engaged in a heated mining debate. (READ and WATCH: MVP to Gina Lopez on mining: You’re lying!)

Mining in ‘rough sailing’

For Liu, it would take time before the movement of share prices in mining stocks stabilizes.

“Definitely, we have to wait for her policy. It’s a wait-and-see attitude. Investors will wait for her mining policies and study them,” the president of Summit Securities said.

His remarks were echoed by Calaycay, saying Lopez is more of a pro-environment than an anti-mining advocate.

“There is a nuance between being anti-mining and being pro-environment. I believe Ms Lopez is of the latter group.  Until we see a clear policy direction and specific policies emerging therefrom, and beyond motherhood, industry shares (mining) may be in for rough sailing,” Calaycay told Rappler.

In an interview with ANC on Tuesday, June 21, Lopez said she is “absolutely against mining,” as it destroys the environment and deepens poverty level.

Balance can be struck

But stock analysts believe that a balance can be struck between the interests of miners and the environmentalists.

“I am quite confident that a balance can be struck. It may take some time, however,” Calaycay said.

For Liu, it is not a closed-door sector for mining, even Lopez serves as head of DENR.

“I believe [President-elect Rodrigo] Duterte will have the last say. He said he will allow responsible mining, so I guess there will be a balance here. You can’t close the door for the mining sector,” Liu added.

In a Wallace Business Forum early 2016, Duterte said he will allow mining investments as long as miners follow the Australian standard of responsible mining.

Philex Mining earlier welcomed the warning issued by Duterte to shut down all firms that degrade the environment.

Michael Toledo, Philex Senior Vice-President for Public and Regulatory Affairs, said that his firm “fully supports the drive of President-elect Rodrigo Duterte against illegal and irresponsible mining.”

Philex Mining is one of the oldest and largest mining companies in the Philippines. – Rappler.com