Duterte’s tirades vs. water firms drain market values of DMCI, Ayala, MPIC, Manila Water

President Rodrigo Duterte’s series of tirades against Metro Manila’s concessionaires have drained the market capitalization of companies related to Maynilad Water Services Inc. and Manila Water Co. Inc.

Shares of Pangilinan-led Metro Pacific Investments Corp. (MPIC) closed at P2.69 per share on Thursday, down 15.67% from P3.19 on Wednesday—its lowest since Nov. 3, 2011 when it closed at P3.10.

It was able to claw back 11.90% to close at P3.10 per share on Friday in what analysts described as a technical rebound.

MPIC and DMCI Holdings own controlling equity in Maynilad.

Shares of DMCI Holdings suffered a 1.17% decline to P5.05 on Thursday from P5.05 on Wednesday.

The Consunji-led conglomerate’s shares recovered as well on Friday to close at P5.55 per share, up 9.90%.

“MPIC and DMCI stock price movements today are just a short-term bounce play from oversold conditions. However, the trend remains bearish in the short term,” Unicapital Securities equity analyst Christopher San Pedro said.

Manila Water shares incurred a 9.24% decline to close at P10.02 per share on Friday from P11.04 on Thursday.

Parent Ayala Corp. lost 1.51% at P778 per share on Thursday from P790 the previous session. It slightly recovered 0.51% on Friday to close at P782 per share.

“The political risk of the concessionaires’ contracts triggered the massive sell-off in listed companies that are related to Maynilad and Manila Water,” San Pedro noted.

The concession agreements of Manila Water and Maynilad that have been extended to 2037 were canceled by the Metropolitan Waterworks and Sewerage System (MWSS).

During a board meeting last December 5, the MWSS directors revoked a resolution drawn during the Arroyo administration approving the extension of the concession agreements. The resolution extended the concession agreements by another 15 years from 2022.

President Rodrigo Duterte is protesting a liability clause in the concession agreements that holds the government liable if it interferes with the implementation of agreed water rates and accountable to indemnify the companies for losses incurred.

The Permanent Court of Arbitration in Singapore has ordered the Philippine government to pay Maynilad around P3.6 billion and Manila Water P7.4 billion as compensation for losses or damages as spelled out under the liability clause.

Manila Water and Maynilad are no longer pursuing their respective arbitral wins and will instead coordinate with the government to review the supposedly onerous provisions in the concessions deals.

“Ayala Corp., MPIC, DMCI have stakes in water concessionaires Manila Water and Maynilad ... This week’s downturn for these issues may be a reflection of investors’ lack of confidence and the uncertainty over what the water concessionaires may face, especially moving forward to year 2020,” Timson Securities equity analyst Darren Pangan said.

For his part, Regina Capital head of sales Luis Limlingan noted that investors are avoiding the companies related to the water concessionaires until a resolution covering future operations of both utilities beyond 2022 has been secured. —VDS, GMA News