Shares next week seen dictated by inflation fears
Agence France-Presse
First Posted 17:17:00 04/11/2008
MANILA, Philippines -- Share prices are expected to be dictated by fears of rising inflation, spurred by high food prices, over the coming week, dealers said Friday.
"It's a certainty that inflation levels will spiral. This will weigh on corporate earnings," said Astro del Castillo of First Grade Holdings.
For the week to April 11, the composite index fell 42.06 points or by 1.4 percent to 2,940.98 points.
Average daily turnover fell to 765 million shares worth P2.55 million ($61.2 million) from 1.41 billion shares and P3.2 billion in the previous week.
"The local equities market will continue to move sideways next week as there is no clear direction from overseas markets. Investors are taking this wait-and-see attitude," said Conrado Bate of Citiseconline
"Volumes have really shrunk and people would rather sit on their cash -- they know there is going to be a long period of a slowdown and there is no rush to get back to the market," he said.
The country's annual inflation rate rose to a 21-month high of 6.4 percent in March as food prices surged.
"Investors are seeing the possibility of accelerating inflation for the month of April. Aside from crude oil, food prices are going up, and the low-income labor force will soon ask for higher wages to cope with rising prices," said Lawrence de Leon of Accord Capital Equities.
Runaway inflation could put the Philippine central bank under strong pressure to lift interest rates, after lowering them four times in four consecutive months from October last year.
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