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Key index closes at 18-month low on inflation worries

Thomson Financial
First Posted 13:17:00 04/28/2008

Filed Under: Markets & Exchanges, Stock Activity

MANILA, Philippines ? (UPDATE) Shares fell on Monday, sending the main index to its weakest finish in nearly 18 months as investors continued to worry about rising inflation and the pressure it will put on earnings and household budgets.

"The market was spooked by crude oil prices hitting almost $120.00 a barrel. The ghost of inflation continues to haunt investors," said Astro del Castillo, managing director at fund manager First Grade Holdings.

New York's main oil futures contract, light sweet crude for delivery in June, touched $119.93 a barrel in electronic deals and was later trading in Asia at $119.35 on Monday, up 83 cents, after the shutdown of a major North Sea pipeline added to supply worries.

Bucking the upbeat mood in other Asian markets, the composite index fell 38.49 points or 1.4 percent at 2,739.44, trading in the red for most of the day after opening slightly higher. It was the index?s weakest finish since Nov. 2, 2006, when it settled at 2,721.78.

The all-share index was down 19.30 points or 1.1 percent at 1,711.36.

There were 81 decliners and 15 advancers, while 54 stocks were steady.

Turnover rose to P2.4 billion from Friday's P1.9 billion.

"Philippine stocks are oversold but there are no fresh leads that can entice investors to go back and pick up bargains," del Castillo said.

The Philippine market suffered the embarrassment of being in the red last week when other bourses rebounded along with Wall Street, said Francisco Liboro, president of PCCI Securities.

The recent spate of downward revisions in the country's economic growth forecasts by foreign investment houses has "severely hurt the country's image as one of the economies that could decouple from the US slowdown by sustaining our own growth momentum," he said.

Liboro said foreign investment houses placed too much weight on exports which contribute only slightly to Gross Domestic Product growth.

For this year, the government is projecting economic growth will ease to a range of 6.3 to 7.0 percent from 7.3 percent in 2007, its fastest pace in three decades.

"They failed to see that the country's economy is not export-driven but consumption-driven," fueled by sustained strong remittances from more than eight million Filipinos working abroad, Liboro said.

Philippine Long Distance Telephone Co. (PLDT), the country's most valuable company, fell 0.6 percent to P2,510.00, tracking its losses in New York on Friday.

Before the opening bell, PLDT said its wholly owned unit Smart Communications Inc. acquired a local telecommunications company for P419.5 million ($10 million) as part of its plan to expand and upgrade broadband services.

SM Investments Corp. was 0.4 percent lower at P249.00. The company declared a cash dividend of P5.90 to shareholders as of May 25 and on Friday said it was expecting net profit this year to grow by 13 percent to 14 percent.

SM Investments, a family-owned conglomerate with interests in shopping malls, real estate and banks, posted a 13 percent increase in net profit last year to P12 billion as brisk consumer spending boosted sales at its retail segment.
San Miguel Corp. was steady at P44.50 for A shares and P46.00 for B shares. The domestic stock offering of its unit San Miguel Brewery Inc. (SMBI) is underway following an oversubscribed international offering.

SMBI is offering up to 770.5 million shares or 5.0 percent of its outstanding stock at P8.00 per share. Listing on the Philippine bourse is set for May 12.

($1 = P42.10)

Copyright 2015 Thomson Financial. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.




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