After learning that NYSE (NYSE by its acronym in English) froze the actions of Graña y Montero (G & M) and initiated the process for its delisting, the Lima Stock Exchange ( BVL ) informed that it will suspend the negotiation of its shares this Friday for almost two hours (from 8:20 a.m. to 10:00 a.m.) for a price formation process to take place.
The suspension of the shares of the construction company in the NYSE , Which was due to the fact that it was not able to present its audited financial statements for 2017 within the required period, led the BVL to make this decision. It should be noted that Graña y Montero has appealed the beginning of the delist in New York.
With this measure, the BVL seeks to avoid excessive volatility in the pricing of the local share of the company (G RAMONC1 ).
Marco Alemán, Investment Analyst and Capital Markets in Kallpa SAB , explains to Trade that this process of suspension in the local stock exchange is a “normal procedure” that is carried out when companies report situations that can have a pronounced influence on the price of their shares.
“With the delisting of the securities of G & M in the NYSE, there could be an overreaction at the beginning of the BVL [this Friday], for which the formation of prices will be expected to take shape at noon,” the expert explains.
For his part, Luis Eduardo Falen, senior analyst at Research de Intligo SAB , agreed that, through the suspension of negotiations, the stock exchanges seek to avoid large variations that may affect both the action involved and the position in general.
“G & M has already said it will appeal the decision [of the NYSE] and that it will continue to operate in the ‘OTC’ [ ‘over the counter’, an over the counter market ] The first consequence of this is that definitely the price of the stock will be affected and, for the blow is not so strong, a price formation is carried out, “he says.
PRICE TO DETERMINE
The formation of prices, which will be given for the role of G & M after its brief suspension, is the balance between the proposals for buying and selling an action to avoid large differences between the two.
José Larrabure, manager of the Investment Division of Prima AFP, details that this process usually occurs when there is a warning of very large movements in an action.
“Sometimes, when there is an apolitical news, the stock market stops for a while, so that the information does not hit, then it can continue to fall when it reopens, but the panic situation is avoided, thus preventing the markets from exacerbating the falls. “he adds.
As an example, Falen explains that if an action is S / 2 and but the purchase order is S / 1 sol, a very drastic variation that can be negative is generated. “What is sought is to prevent it from happening that way,” he says.
For G & M, as determined by the Lima stock exchange, the purchase and sale proposals will begin to be entered between 10:00 a. m. and at noon, and with both factors, the reference price will be formed to calculate the limits of variation during the day.
“Probably at the beginning [the blow will be strong] but I think that if the market manages to understand the news well, and the fact that the company is taking several positive actions, [there would be] an initial fall and then there will be a purchase,” remarks Laraburre .
For this scenario, Alemán foresees that a wave of sales of the G & M shares could be generated.
This is because some funds have a policy of not investing in ‘OTC’ markets -as it is a much less liquid market- or in companies that are not on the NYSE.
On the other hand, Larrabure, of Prima AFP, considers that the action of G & M in Peru “would not have to be so affected”, since the ones that are happening to list to another market are the ADS, values that were listed in NYSE .
“It’s not going to change the portfolio, first, because the portfolios of the AFPs are very large positions versus the liquidity of the local stock market […] This is a temporary and remediable issue on the part of the company,” he said. executive.