Happy Thursday, Barkada --
The PSE gained 183 points (!!) to 6006 ▲3.2%
What a crazy couple of days for those who invest/follow foreign markets. I've been answering questions privately from so many readers that I decided to start a daily "What's happening" post that will update on the overnight news. I'd love to keep answering specific questions, but there aren't enough hours in the day to do that, manage my own investments, write MB, and live my regular life, so that's what we're going to do for now.
*** FSF UPDATE ***
In happier news, the FREE STUFF FRIDAY draw is tomorrow morning, and the cut-off for entries will be end-of-day today, so today is your last day to enter [link] if you haven't already.
The grand prize is a 1.5 HP Split Type Inverter aircon from our sponsor, NEXTASIA Land, so you could say the stakes are pretty high! Or cool. I guess that would have been better.
The aircon winner and the twenty umbrella winners will be announced tomorrow morning!
▌In today's MB:
- TOP drops 3% in turbulent IPO
- 100% oversubscribed
- 1st day churn low (~14%)
- Stabilization fund active
- QUESTION: What's happening right now?
- Update on global finance
- DOW lurching up and down
- Commodities, currency all moving
- Asiabest tender offer dates adjusted
- Everybody still waiting on PLC
- Fairness opinion delayed
- They say we get it tomorrow
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▌Main stories covered:
[UPDATE] Top Line drops 3% in turbulent IPO... Top Line Business Development [TOP 0.30 ▼3.2%; 100% avgVol] [link opened trading on Tuesday just below its ₱0.31/share IPO offer price. By 10 AM, with the price languishing at the session’s low point of ₱0.285/share, a huge surge of buying interest pushed TOP’s price up to ₱0.315/share over the course of just 15 minutes. The stock would bounce around between ₱0.295 and ₱0.31 for the rest of the day until the final few minutes, when the stock rocketed up to ₱0.32/share, then immediately sank back to ₱0.30/share to close the day’s trading. Over 326 million shares changed hands during the session, worth nearly ₱100 million, with ₱0.5 million worth of net foreign buying. TOP starts life on the PSE with a 22% public float.
Was the IPO oversubscribed? Yes! TOP said that it raised a total of ₱732.6 million, which implies that all (or nearly all) of the ~214 million overallotment shares were sold. The ₱666 million raised from the sale of the primary firm offer shares will go to TOP, and the remaining ₱66 million raised from the sale of the secondary overallotment shares will go to the Lim Family’s holding company, Top Line Equity Corporation.
Is there a stabilization fund? Yes, but it’s been a while since we’ve had an IPO, so let’s quickly remember how the work. First, the stabilization fund can only buy up stock (supply of artificial demand) when the price is below the IPO offer price of ₱0.31/share. Any movement of TOP’s price above ₱0.31/share during the session was organic. The stabilization fund has a maximum purchasing quota of 214,8440,000 TOP shares, and a maximum lifetime of 30 days. It ends when either of those two limitations are met/triggered.
Churn was low: Only about 14% of the public float changed hands on the first day of trading, which is on the low side. 1st day churn isn’t a clear signal, but the higher the churn, the greater the number of IPO buyers that might just be short-term flippers. I don’t start thinking about churn unless it starts to get close to 50%, so this result tells me that the vast majority of IPO buyers were in the trade for the right reasons. Not just to make a quick chunk of money.
What’s next for TOP? Expansion. Regardless of what’s happening to the price of oil (it’s dropping), or what’s happening to the world around us (it’s buckling under fallout from tariffs), TOP just has to execute on its prospectus plan to build out its Light Fuels service station network. They’re putting the money into something they know how to do, in a region where they know how to do it.
- MB: Success isn’t guaranteed, and anything retail-facing is subject to external factors like consumer sentiment, but this management team has already delivered in the past on what they’re saying they’ll do in the future. I’m not a huge fan of the fuel retail business, but part of that is from having spent a lifetime watching Petron [PCOR 2.46 ▲4.2%; 75% avgVol] and Phoenix [PNX 4.17 ▼0.2%; NaN% avgVol] squander their respective opportunities. To me, this is as much about property management as it is about selling fuel. What opportunities unfold when a company has a connected network of convenient point-of-sale locations? What margin-builders will TOP be able to leverage to grow its profitability serving a customer base that it knows very well? While they do that, let’s see how TOP’s first few days on the exchange go.
[UPDATE] What’s happening right now?... Considering the magnitude of what is happening in the US and how that is rippling around the world, I felt like it might be useful to do a daily check-in to just note what has happened and what things appear to be moving at any given time.
What’s the goal? Hard to say. Trump has failed to provide a coherent overview of his own plan, and seems to have (to some degree) lost control of the plan’s narrative as political surrogates are left to defend the plan against the growing opposition to the move and the global financial chaos it has created. The stock market crash has so far not prompted the Fed to lower rates, nor has it caused long-term bond yields to fall, so we can’t tell yet if this is all a part of a plan to refinance US debt at a lower rate, or if it’s simply a manifestation of madness and power. Now he just announced a 90-day pause on tariffs.
The DOW is all over the place: The US markets have been lurching dramatically during each trading day. On Tuesday, the DOW actually pumped up almost 500 points on rumors that the US would grant a 90-day pause on the implementation of Trump’s tariffs, only to lose all that (and then some more) when it was revealed to be “fake news”. On Wednesday, the DOW dropped almost 800 points on news that the White House had confirmed its plan to impose an additional 34% tariff on imports from China, raising the total tariff on Chinese goods to 104%. Those tariffs went into effect. Then China announced retaliatory tariffs. These are intraday swings that I do not remember witnessing in my life as a trader. These are not normal times. The DOW is up 150 points this morning as I write this. EDIT: It’s up 2673 points on news of Trump announcing 90-day pause on tariffs for everyone (except China).
Commodities: Gold seems to have leveled off around the $2,980-$3,020/ounce range, down from the $3,150 highs we saw before the tariff announcements. Oil has dropped significantly and continues to drop as of this writing. A barrel of oil was $71 before the announcement; it was $56 yesterday, and it’s $57 today.
Currency: The big news in the FX markets on Wednesday was People’s Bank of China (PBOC) and its move to “send a signal” to the US through the strategic devaluing of the yuan below a long-held range. A weaker yuan would make Chinese products cheaper in foreign currencies, and potentially offset some of the Trump tariff’s impact on the value of Chinese goods relative to those made in the US. If China devalues the yuan (as it did during Trump’s 1st term) and allows some degree of capital flight from China, we could see wealthy Chinese race to acquire foreign currencies and assets, like back in 2015. That event was very positive for Bitcoin’s price.
Bitcoin and friends: After chilling at over $100,000 per BTC in late January, BTC is now at around $77,000 and still showing weakness, dropping almost $10,000 over the course of the tariff period alone. Whatever is happening to BTC is nothing compared to the implosion facing ETH hodlers, with prices down more than 56% YTD and down over 20% during the tariff period. At least FARTCOIN holders are happy.
- MB: This is Exhibit #1 in the “Voting Matters” debate. It’s not controversial to say that Kamala Harris would not have caused this to happen, as whatever is happening here is 100% on Trump’s account. That said, I think the uncomfortable truth is that Harris probably wouldn’t have done anything to adjust the long-term trajectory of any of the problems that have caused the US electorate to support the Trump administration to commit these financial atrocities. But that’s all in the past. Looking forward, it’s hard to imagine putting any of this toothpaste back in the tube. I get the impression that things have changed dramatically in ways that we might not feel for months or even years, but that once we feel them, we might think it a little bit overwhelming to consider the severity of the changes that have occurred in such a (relatively) short time. I don’t see this attitude reflected back at me by my friends, colleagues, or family, so I’m doing my best to avoid smashing the panic button. But I can’t ignore that I smell smoke, and I feel like the only way for me to remain “in the arena” is to search for the source of the smoke and watch that process like a hawk. So that’s what I’m going to do!
[UPDATE] Asiabest tender offer dates have been adjusted... Asiabest Group [ABG 26.20 ▼1.1%; 0% avgVol] [link] notified the exchange that the tender offer by Premiumlands Corp (PLC) for up to 100 million ABG shares at ₱2.552/share will begin on April 14 and end on May 16. ABG said that a Tender Offer Report will be filed on April 11. The previous placeholder dates for the tender offer were between March 10 and April 7.
- MB: I don’t have any special info on what caused the change beyond what the company already revealed (and that I reported) about a “delay in the finalization of the fairness opinion report from PLC”. As I wrote a month ago, “I’m not putting it on my calendar until I see the Tender Offer Report.” Until that official document is in our hands, I’m not going to get myself too twisted up about some dates that may or may not be important. There’s no penalty to PLC or ABG if PLC misses this self-imposed April 11 deadline. Regardless, I’m eager to read the fairness opinion because of the massive gap between PLC’s stated tender offer price of ₱2.552/share and the current market price which is ₱26.20/share. That’s spicy.
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