FOR many Chinese investors, names are important. In China, for instance, with the proposal to allow President Xi Jinping to stay in power indefinitely, some investors are buying shares in companies with “king” or “emperor” in their names.
That may also be true for the Philippines, as many of the Chinese investors here are still going with the tradition of investing in stocks that offer good luck, especially now with the erratic move of the Philippine Stock Exchange (PSE).
These include stocks that have “gold,” “dragon,” “emperor” or “mega” in their names.
“I wouldn’t be surprised if many of the traditional Chinese investors are still doing that to this date,” Astro del Castillo, managing director at First Grade Finance Inc., said in a telephone interview.
“But we’re hoping that they’re not doing it at this point,” del Castillo said, adding that they conduct investors’ education to avoid such action.
But in a period of speculation, with the benchmark index’s wild swings during the past weeks since the New Year, many are betting on second- and third-tier listed stocks.
One of these stocks included the Villar-led Golden Haven Inc., a company that operates memorial parks and crematoriums in the country.
Golden Haven Inc. had an initial public offering (IPO) price of P10.50 per share, but its stock price at the moment now stands at an eye-popping P314 per share, or a 2,890-percent increase. Its share price rose as much as P343 apiece.
The company denied having a hand in the stock price’s movement and was already asked by the PSE on the issue.
One such statement was issued on February 21, when Golden Haven’s stock price zoomed from P174 to P261, 15 minutes before the midafternoon trade that day.
The company said it was not aware of any undisclosed information that could have influenced the price of its shares, HVN, just five days after the Chinese New Year.
Notably, while its board of directors approved the change of name from Golden Bria to Golden Haven, the word “golden” was retained. Gold is one of the lucky colors for many Chinese.
However, Luis Limlingan, head of research at broker Regina Capital and Development Corp., is skeptical on the relation between the stock and the name of the company behind the stock.
Limlingan said such wild swings on the share price may not be due to the name alone, but on speculation on the third telco player, which the Villar family is rumored to also be interested in.
He added that there is little evidence on the behavior of investors from mainland China, as the data are lumped together with other foreign transactions.
The market is abuzz with the supposed third player to enter the telecom industry, long dominated by PLDT Inc., led by the group of Manuel V. Pangilinan; and Globe Telecom Inc., a company backed by the Ayala group.
Shares of both companies grew an average of 17 percent during the last few months after the Duterte administration has invited last November a Chinese telecom giant to pose a challenge to the two major players.
Even shares of Easycall Communications Philippines Inc., an operator of pagers killed by text messaging service of mobile-phone operators, jumped almost four times over the last four weeks, closing at P52 per share last week. It is rumored that the third player will use Easycall as its backdoor entry.
“Looking at China Telecom’s financials, the company definitely packs a punch and could easily overcome the high barriers to entry posed by the high capex [capital expenditure] requirement of the industry,” broker Papa Securities Inc. said in a research note.
“It could easily cover the $700 million to $1 billion in capex requirement, as this accounts for only 1.8 percent of its 2018 projected revenue,” the note said. “If in any case China Telecom is able to find a well-funded Filipino partner or partners that could absorb their investments, the typical capex requirement would only increase its projected capex by 7.6 percent or about 1.8 percent of revenues.”
Other than the importance of names, some Philippine investors rely mainly on market rumors, which are usually communicated through Facebook groups and other chat platforms in the social media.
Prior to Golden Haven, the first wild movement was last seen on the stock of mobile-games maker Xurpas Inc., a technology company specializing in the creation and development of digital products and services for mobile end-users.
Another wild movement was also seen on the stock of up-and-coming property developer DoubleDragon Properties Inc. Back then DoubleDragon had no track record to speak of, aside from being backed by Mang Inasal fast-food chain founder Edgar J. Sia II and Jollibee Foods Corp. Chairman Tony Tan Caktiong.
Both Xurpas and DoubleDragon enjoyed upward swings in their stock price during the initial trading weeks, but Xurpas was now below its IPO price of P3.97 apiece.
DoubleDragon, with its IPO price of P2 per share, reached as high as P70. However, its share price is now down to P32.45.
According to Christopher Mangun, head of research at Eagle Equities Inc., the speculative issues in the coming weeks include Puregold Price Club Inc., a company led by businessman Lucio Co.
“The name may not be true for other stocks,” according to Limlingan, who said some of the share price of those that has the word “lucky” on a company name were lightly traded.
Puregold’s stock price is barely moving at P52.20 and only reached a 52-week high of P55.10; liquor maker Emperador Inc. was last traded at P7.88 and reached a one-year high of P8.96, and so are the stocks of property developer Megaworld Corp., last traded at P4.83 from a year high of P5.85 and Megawide Construction Corp. that was last traded at P21 from a 52-week high of P22.15.
“We are hoping that they [investors] are not investing [based] on the names alone,” del Castillo said. “Because there will surely be a reality check after the period of speculation.”
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