Is it bad that so many companies are delisting?
No, but it is a case-by-case situation.
It’s healthy, in my opinion, for the PSE to initiate involuntary delisting procedures against companies like UNI and PCP, which have shown little interest in satisfying even the most basic of PSE registration requirements.
I think we can all agree on that. It’s also logical for chronically undervalued conglomerates like Metro Pacific [MPI 4.77 0.6%; 295% avgVol] to consider delisting as a way to maximize shareholder value. We might not agree on the tactics or the price of the delisting, but I think we can all agree that a company should be able to exit the market to explore optimization efforts like this. It’s much less healthy, in my opinion, to have companies attempting to leave the exchange to reduce vulnerability to political attack.
The Duterte-era smash-and-grab approach to the stock market was noted by foreign investors, and the administration’s willingness to violate the capital markets for populist political gain was a source of trepidation from potential strategic investors that I spoke with during that time. Was the attempted delisting of Lopez Holdings [LPZ 14.12 unch; 363% avgVol] in early 2021 a response to that political vulnerability? Is there an element of this thinking in MPI’s desire to delist? After all, it was MVP who wondered aloud, in a letter to shareholders, whether the era of the publicly-traded utility was dead thanks to the Duterte administration’s political shenanigans.
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It’s not a perfect analogy, but I think of a healthy stock market as an online message forum. To encourage great discourse, the forum’s moderators need to open the forum up to as wide an audience as possible, while also being quick to step in with a wide array of moderation tools to help keep the discussion on track and prune out unwanted spam and clearly-malicious posting.
The moderators need to communicate clear and enforceable guidelines to the forum participants and use their moderation tools actively and consistently to resolve conflicts and keep posts productive. I feel like the PSE’s “moderation” of the PSE is not too different. I’d like to see the PSE distance itself somewhat from the role of market “gatekeeper”, and instead transition into an “aggressive moderator” role. In an alternate universe where the PSE is already operating in that mode, listing would be easier so we’d have more companies, but the banhammer would be quicker to strike on any company that stepped out of line, so we’d have an uptick in delistings, too.
In the US, they average around 200-300 IPOs each year, which is about double the annual average number of companies that delist. Keep what works, but be quick to discipline what doesn’t, and don’t be afraid to remove anything that can’t seem to figure out how to make it work. With that approach, I think what happened to UNI and PCP was good and healthy. Better late than never.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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