PSEi snaps 3-day rally as Hanjin debt woes spook investors

Share prices on the Philippines Stock Exchange snapped a three-day winning streak on Friday as investors, spooked by reports that five of the country’s biggest banks are exposed to what may well be the largest corporate default in Philippine banking history, unloaded positions.

The bellwether PSEi lost 81.14 points or 1.02 percent to close the session at 7,904.09. The broader All Shares shed 34.76 points or 0.73 percent to 4,730.15.

The Financials index recouped some losses to close at 1,772.32, down 46.10 points  or 2.54 percent. It lost as much as 3.01 percent earlier in the session. 

“The decline in the market was mainly caused by the sell-off in the banking sector on news that Hanjin will be defaulting on their debt,” COL Financial president Dino Bate said.

Subic Bay Metropolitan Authority (SBMA) Chairperson Wilma Eisma revealed on Thursday that Hanjin Philippines has filed for a voluntary rehabilitation due to ballooning financial obligations to Philippine and Korean lenders.

Hanjin Philippines officials told the SBMA that the company has some $400 million in outstanding loans from Philippine banks on top of another $900 million in debts owed to South Korea lenders.

The Philippine banks involved are Land Bank of the Philippines, Bank of the Philippine Islands, Banco de Oro Universal Bank, Rizal Commercial Banking Corp. (RCBC), and Metropolitan Bank and Trust Co., according to industry sources.

“Today’s pullback can be attributed to the debt problem of Hanjin Heavy Industries and Construction Philippines to which five of banks were exposed, four of which are listed on the PSE,”Philstocks Financial Inc. research analyst Japhet Luis Tantiangco said.

“The Financial index lost the most today—by 2.54 percent—while the top two index losers were Metrobank and Bank of the Philippine Islands, down by 4.82 percent and 4.76 percent, respectively,” Tantiangco noted.

Among the banks involved in Hanjin, however, RCBC was the biggest loser. It closed down P2.65 or 9.12 percent  per share at P26.40. BDO Unibank closed unchanged at P131.30 per share.

Regina Capital Development Corp. head of sales Luis Limlingan noted RCBC has the biggest exposure of around $140 million while the “big three” banks BDO, BPI, and Metrobank’s exposures range from $60 million to $70 million.

RCBC also has smaller assets relative to other creditors of Hanjin Philippines at P475.765 billion, Bangko Sentral ng Pilipinas data showed.

BDO, the country’s largest bank, has total assets of P2.665 trillion followed by Metrobank with P1.705 trillion and BPI with P1.649 trillion.

Foreign funds bought P4.784 billion and sold P4.555 billion for a net buying position of P228.902 million.

More than 5.491 billion shares valued at P8.501 billion, changed hands. Decliners led advancers, 125 to 79, and 37 issues were unchanged.

Week-on-week, the main index gained 142.98 points or 1.84 percent from 7,761.11 on January 4. The bellwether increased by 414.89 points or 5.54 percent on January 2, the first trading day of 2019. —VDS, GMA News