PSE Stocks affected by COVID-19 Special Powers of Pres. Duterte

Pres. Rodrigo Duterte has called on the Philippines Senate and House of Representatives to conduct a special session last March 23, 2020 to vote on a bill drafted by Malacanang that will grant the President additional powers to address the COVID-19 situation.

Special Powers for Pres. Duterte

The bill called the “Bayanihan to Heal as One” was eventually approved by Congress and gave Pres. Duterte vast powers supposedly intended to help the government effectively deal with the current COVID-19 pandemic, including the power to:

1. Direct the operations and, if necessary, take control of any privately-owned public utility or business affected with public interest, including but not limited to hotels and similar establishments, public transportation, utilities, and telecommunication companies (Section 4, Item 4 of the bill);

2. Undertake the procurement of the following as the need arises, in the fastest manner possible (Section 4, Item 6):

• goods, which may include medical equipment and devices, personal protective equipment (PPE), common medicines (vitamins, paracetamol, mefenamic acid, etc.), medical supplies and consumables (alcohol, tissue, hand soap, detergents, thermometers, etc.);
• lease of real property or venue for use to health workers or serve as quarantine centers, medical relief and aid distribution centers, or temporary medical facilities;
• construct and operate temporary medical facilities;
• procure utilities, telecommunications, and other critical services in relation to operation of quarantine centers, medical relief and aid distribution centers, and temporary medical facilities.

3. Require banks and lending institutions to lower the interest rates and to ensure availability of credit to productive sectors of the economy (Section 4, Item 7);

4. Liberalize the granting of incentives to manufacturers and/or importers of critical or needed equipment or supplies (Section 4, Item 8);

5. Regulate and limit the operation of all forms of transportation in the country, including control of private transportation companies in the road, rail, aviation, and maritime sectors (Section 4, Item 10);

6. Regulate traffic on all roads, streets, and bridges in the Philippines (Section 4, Item 11);

7. Regulate the distribution and use of power, fuel, energy, and water (Section 4, Item 13);

8. Cancel any project, program, or activity of the national or local government previously given and appropriated budget by Congress, for the purpose of generating savings; the savings from which can be reallocated, reprogrammed, or realigned by the President and the Executive Department. This includes any unspent or unused funds from the 2019 and 2020 General Appropriations Act (Section 4, Item 14).

In an interview with the Philippine Daily Inquirer, Malacanang spokesperson Salvador Panelo did not deny that a bill has been drafted giving additional powers to the President and which will be discussed by Congress tomorrow, but he refused to confirm that Pres. Duterte was asking for “emergency powers”.

“The letter to Congress [was asking for] powers necessary to carry out urgent measures to implement the national emergency,” Panelo told the Philippine Daily Inquirer, “not emergency measures.”

Copy of “Bayanihan Act of 2020”

Here’s a copy of the proposed bill that is set to be discussed by Congress in a special session tomorrow, March 23. The copy was published by another newspaper, The Philippine Star.

The short title of the bill is “Bayanihan Act of 2020” while its official and longer title is “An Act to Declare the Existence of a National Emergency Arising from the Corona Virus 2019 (Covid-19), and to Authorize the President of the Republic of the Philippines for a Limited Period and Subject to Restrictions, to Exercise Powers Necessary and Proper to Carry Out the Declared National Policy and for Other Purposes.”

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Document Source: Philippine Star

Companies and Sectors impacted by “Bayanihan Act”

Several provisions of the bill have far-reaching consequences on various sectors and industries in the country, including the Telecoms, Utilities, Banking, Hotel and Property, Manufacturing, and Transportation sectors, among others.

This is because according to Section 4, Item 4 of the bill, the President can:

… temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest to be used in addressing the needs of the public during the COVID-19 emergency as determined by the President, including but not limited to hotels and other similar establishments to house health workers, serve as quarantine areas, quarantine centers, medical relief and aid distribution locations or other temporary medical facilities; public transportation to ferry health, emergency, and frontline personnel and other persons, and telecommunications entities to facilitate uninterrupted communication channels between the government and the public…

Proposed “Bayanihan Act of 2020” (Section 4, No. 4); emphasis ours

If approved, the bill will empower the President to control and take over, albeit temporarily, the operations of any company covered by the provisions of the bill, although “to the extent feasible,” management shall be retained by the owners of the business. However, even in such a case, the owners and managers shall still be under the direction and supervision of President Duterte or his duly designated representative.

In effect, the bill gives the President absolute power to control and decide which products that company should produce, the price at which to sell the product, to whom these products and services can be given to, who they should be contracting with, and what the company employees can and should do, among others.

Ownership and control of the business will be restored upon the discretion of President, that is, once Pres. Duterte has determined that “further use or operation by the Government of any such public service of enterprise is no longer necessary under existing conditions,” as mentioned in the bill.

Businesses and owners or shareholders of affected businesses may be given “reasonable compensation for any additional damage or costs… after the situation has stabilized or at the soonest time practicable.”

List of PSE Stocks affected by “Bayanihan Act”

Without a doubt, this bill will certainly have material, long-term impact on several companies and businesses in the country, including those that are listed in the Philippine Stock Exchange (PSE).

Examples of PSE-traded companies that could be affected — positively or negatively, we still don’t know — are:

Telecommunications Companies

Philippine telcos may be impacted because as per Section 4, Item 4 of the proposed “Bayanihan Act of 2020”, the President may temporarily take over telecommunications entities to facilitate “uninterrupted communication channels between the government and the public.”

There are two publicly listed telcos in the PSE:

1. PLDT Inc. (TEL)

2. Globe Telecom (GLO)

Electricity, Energy, Power & Water Companies

Section 4, Item 13 of the proposed bill will give Pres. Duterte power to “regulate the distribution and use of power, fuel, energy, and water, and ensure adequate supply of the same.”

Thus, the following power, energy, water, and utility companies will certainly be affected if the bill becomes a law.

1. AC Energy Philippines (ACEPH)

2. Aboitiz Power Corporation (AP)

3. Alsons Consolidated Resources (ACR)

4. Basic Energy Corporation (BSC)

5. First Gen Corporation (FGEN)

6. First Philippine Holdings Corporation (FPH)

7. Manila Electric Company (MER)

8. Manila Water Company (MWC)

9. Pilipinas Shell Petroleum Corp. (SHLPH)

10. PetroEnergy Resources Corporation (PERC)

11. Petron Corporation (PCOR)

12. Phoenix Petroleum Philippines (PNX)

13. SPC Power Corporation (SPC)

14. Vivant Corporation (VVT)

Transportation Companies

The proposed bill will also give power to Pres. Duterte to “regulate and limit the operation of transportation in the road, rail, aviation, and maritime sectors, whether private or public” (Section 4, Item 10).

Thus, these transportation companies could definitely be impacted if such bill is approved to become a law.

1. 2GO Group (2GO)

2. Asian Terminals, Inc. (ATI)

3. Cebu Air, Inc. (CEB)

4. Chelsea Logistics and Infrastracture Holdings Corp. (C)

5. Harbor Star Shipping Services, Inc. (TUGS)

6. International Container Terminal Services, Inc. (ICT)

7. LBC Express Holdings, Inc. (LBC)

8. Lorenzo Shipping Corp. (LSC)

9. MacroAsia Corp. (MAC)

10. Metro Alliance Holdings & Equities Corp. (MAH)

11. PAL Holdings (PAL)

Hotels and Property companies may be impacted because the proposed bill allows the President to direct the operations of “hotels and other similar establishments to house health workers, serve as quarantine areas, quarantine centers, medical relief and aid distribution locations or other temporary medical facilities,” from Section 4, item 4 of the bill.

Hotel Companies

Publicly-listed hotel companies in the Philippines are:

1. Acesite (Phils.) Hotel Corp. (ACE)

2. Boulevard Holdings, Inc. (BHI)

3. Discovery World Corp. (DWC)

4. Grand Plaza Hotel Corp. (GPH)

5. Waterfront Philippines, Inc. (WPI)

Property Companies

Property companies traded in the PSE whose projects and developments can be temporarily expropriated to provide accommodation for health workers and hospital frontline employees or to be converted to become quarantine areas for COVID-19 patients and victims include:

1. 8990 Holdings, Inc. (HOUSE)

2. A Brown Company, Inc. (BRN)

3. Anchor Land Holdings, Inc. (ALHI)

4. Araneta Properties, Inc. (ARA)

5. Arthaland Corp. (ALCO)

6. Ayala Land, Inc. (ALI)

7. Belle Corp. (BEL)

8. Cebu Holdings, Inc. (CHI)

9. Cebu Landmasters, Inc. (CLI)

10. Century Properties Group, Inc. (CPG)

11. City & Land Developers, Inc. (LAND)

12. Cityland Development Corp. (CDC)

13. Crown Equities, Inc. (CEI)

14. Cyber Bay Corporation (CYBR)

15. D.M. Wenceslao & Associates Inc. (DMW)

16. Doubledragon Properties Corp. (DD)

17. Empire East Land Holdings, Inc. (ELI)

18. Ever-Gotesco Resources and Holdings, Inc. (EVER)

19. Filinvest Land, Inc. (FLI)

20. Global-Estate Resorts, Inc. (GERI)

21. Keppel Philippines Properties, Inc. (KEP)

22. MRC Allied, Inc. (MRC)

23. Megaworld Corporation (MEG)

24. Philippine Estates Corporation (PHES)

25. Philippine Infradev Holdings, Inc. (IRC)

26. Philippine Realty and Holdings Corporation (RLT)

27. Primex Corporation (PRMX)

28. Robinsons Land Corporation (RLC)

29. Rockwell Land Corporation (ROCK)

30. SM Prime Holdings, Inc. (SMPH)

31. Shang Properties, Inc. (SHNG)

32. Sta. Lucia Land, Inc. (SLI)

33. Suntrust Home Developers, Inc. (SUN)

34. Vista Land & Lifescapes, Inc. (VLL)

35. Vistamalls, Inc. (STR)

Banks

Several banks may be affected because the bill — under Section 4, Item 7 — will require Philippine banks and lending institutions to give loans to sectors or companies that the President will deem important and also be required to charge a lower interest rate to these borrowers.

1. Asia United Bank Corp. (AUB)

2. BDO Unibank, Inc. (BDO)

3. Bank of the Philippine Islands (BPI)

4. China Banking Corp. (CHIB)

5. Citystate Savings Bank, Inc. (CSB)

6. East West Banking Corp. (EW)

7. Metropolitan Bank & Trust Company (MBT)

8. Philippine Bank of Communications (PBC)

9. Philippine Business Bank (PBB)

10. Philippine National Bank (PNB)

11. Philippine Savings Bank (PSB)

12. Philippine Trust Company (PTC)

13. Rizal Commercial Banking Corp. (RCB)

14. Security Bank Corp. (SECB)

15. Union Bank of the Philippines (UBP)

Regardless if this bill will become a law, expect another round of market volatility and severe stock price fluctuations the PSE resumes trading tomorrow. Get ready for another whirlwind ride in the PSE!