Stocks plunge as foreign investors sell 'like mad'

Foreign investors unwound Philippine positions "like mad" yesterday sending share prices to a 15-month low amid a confidence crisis spawned by an unresolved stock manipulation case allegedly involving a friend of President Estrada, brokers said

The Philippine Stock Exchange (PSE) composite index fell 74.16 points, or 4.1 percent, to 1,720.65. The last time the market hit this level was on Nov. 13, 1998, when it settled at 1,711.98.

"Right now we are seeing a lot of selldowns in blue chips. It's across the board, there is a lot of bad news, negative political news and confidence is very low because of the BW scandal," said Nina Carpio of Orion Squire Capital Inc.

"Many investors want to know first the outcome of that," Carpio said.

The Senate reopened yesterday an inquiry into alleged insider trading in the scrip of BW Resources Corp., a gaming firm founded by a key campaign contributor of President Estrada who has been accused by a securities regulator of allegedly pressuring him to exonerate the presidential friend.

Some senators accused the bourse of instigating a coverup.

A PSE report has already implicated the BW Resources founder, Dante Tan, and several brokerages.

The key index is now 11.2 percent below its level when the report was released on Feb. 15.

Irving Ackerman, a stockmarket veteran who heads his own firm I. Ackerman and Co. Inc., said "foreign brokers are selling like mad" at a pace that cannot be absorbed by the local bourse.

"Foreign brokers are still selling very very big every day. We just don't have the strength to absorb all these," Ackerman said, adding that he expects the main index to go lower than 1,700 in the next two weeks before a rebound could take place.

He said fears of an impending interest rate hike in the United States and a 2.28 percent drop of the Dow Jones on Friday had also contributed to the selloff here.

Cilette Liboro, research chief of Orion-Squire Capital, said a "crisis of confidence" resulting from government's "lack of concrete plans to pursue structural reforms" was also behind Monday's rout.

The alleged stock manipulation was allegedly conducted to create an illusion it was being heavily traded ahead of Macau tycoon Stanley Ho's announcement in October that he was investing in a 10 percent stake and assuming the chairmanship of the BW Resources board.

Tan has rejected the accusations, and instead implicated four major brokerage houses which he claimed were also partly responsible in pushing up BW shares by 5,000 percent to hit P127 in the eight months ahead of Ho's entry.

There is widespread concern in the business community here that the case would not prosper since Tan is a close friend of Estrada, whose two-year-old administration has been bombarded by allegations of cronyism.

Securities and Exchange Commission chairman Perfecto Yasay said the President earlier should assure the public that there should be "no whitewash" of the case, considered as the biggest securities scandal to have hit the local bourse.

The SEC is a quasi-judicial body which will determine whether a criminal case could be built against Tan.

Yasay has conceded that no one has been prosecuted for price manipulation or insider trading since the SEC was created in 1936.

Members of the Senate banks committee said yesterday they believed there was an attempt by the PSE management to tone down the report and protect other brokers.

"We are eyeing a bigger controversy, (but) we still have to go through voluminous records to confirm this," its Chairman Sen. Raul Roco said.

He said the four other brokers named by Tan including ex-PSE chairman Wilson Sy's Wealth Securities should have been included in the report for also heavily transacting BW shares.

"Very clearly there is a cover up," added Sen. Nikki Coseteng. --