MANILA, Philippines – Blue chip companies SM Investments Corp. and Ayala Corp. have no plans to buy back their shares despite recent steep drop in the stock market, but Jollibee Foods Corp is considering it.
On Wednesday, the Philippine Stock Exchange main index shed 178.93 points or down 3.02% to close at 5,738.06, a steep drop since the index touched 7,300 this 2013.
Even if the market has been on the downward spiral since June as foreign funds shifted from emerging countries like the Philippines to developed economies, two of the country’s biggest companies are not taking advantage of the low price to invest in themselves — a strategy called share buyback or repurchase. It indicates that the company’s management thinks the shares are undervalued.
At a briefing with business reporters on Wednesday, August 28, Jose T. Sio, the chief finance officer of SM Investments Corp. (SMIC), said the Sy-led conglomerate has a policy not to let the market dictate its stock price.
“Six months ago we already foresee this that Philippine economy would not be able to sustain the market price of stock of over 20% P/E ratio. At that time we were the most expensive stock in Southeast
Asia,” Sio said, adding that the current market correction is also good for the country in order to avoid bigger problems.
SMIC shares on Wednesday closed at P634 per share, down 7.45% from the previous day’s close.
Ayala Corp. managing director and head of corporate strategy department Eric Francia said the company would rather spend its resources for investments rather than in buying back shares.
Stock price of Ayala Corp. also ended lower by P18 or 4.05% to close at P500 per share.
Only food giant Jollibee is considering a buyback.
Ysmael Baysa, chief finance officer of Jollibee, said the current market correction should be a good opportunity for investors to buy stocks. – Rappler.com
According to Baysa share price of Jollibee has not gone down as much since the start of the year.
“Jollibee is still the second best performer in the whole country for 2013 as of Tuesday’s trading. So we are looking at buying back shares,” Baysa said.
“This is a good time for investors to also get in. There are a lot of interest buyers that are waiting for the right opportunity to get in and buy our shares,” he added.
Jollibee’s share price shed 3.14% on Wednesday to close at P154 apiece.
The stock market has been on a decline as “hot money” flowed out after the US Federal Reserve hinted a possible tapering off of bond buying activities. – Rappler.com