Market extends losses on concerns BSP may hike rates

Market extends losses on concerns BSP may hike rates

The Philippine Star 03/09/2006

Share prices closed 1.07 percent lower yesterday, extending losses as investors looked ahead to the central bank’s policy meeting against a backdrop of rising inflation, dealers said.

There were concerns that a sharp rise in consumer prices last month may prompt the monetary authority to raise its benchmark interest rates, they added.

The composite index lost 22.65 points to 2,099.26 after trading between 2,082.06 and 2,122.39.

Turnover amounted to 488.9 million shares worth P1.334 billion.

Losers outnumbered gainers 58 to 23, while 56 stocks were unchanged.

The broader all-shares index fell 9.25 points to 1,026.33, with all other sub-indices in the red.

"The market is just consolidating," said Gomer Tan of Regina Capital Development Corp. "Maybe it’s building up momentum before trying to test the recent high."

James Lago of Westlink Global Equities said: "The market is going through a correction. Prospects of higher interest rates after inflation rose at an eight-month high in February may have weighed on sentiment."

The government reported Tuesday that inflation accelerated to 7.6 percent in February from 6.7 percent in the previous month, although that was in line with the central bank’s forecast of between 7.6 to 7.9 percent.

The new inflation figures will be considered with other factors like domestic liquidity, foreign exchange rate and real sector activity when the Philippine central bank’s monetary board meets on Thursday to set benchmark overnight interest rates.

The last time the central bank raised interest rates was in October 2005. The monetary authority’s overnight borrowing rate stands at 7.50 percent and overnight lending rate at 9.75 percent.

Blue chip Philippine Long Distance Telephone was the most briskly traded stock, closing up P5 to P1,830.

Bank of the Philippine Islands fell 50 centavos to P59 while its parent Ayala Corp. retreated P5 to P335. Ayala Land ended down 50 centavos at P10.25.

San Miguel Corp. saw its A shares go down 50 centavos to P61.50 while its B shares gained 50 centavos to P80.

"Regional sentiment doesn’t look good and that’s spilling over into the market," said Allan Yu, who helps manage $2.8 billion at Metropolitan Bank and Trust Co., the Philippines’ largest lender by assets. "Regional investors are worried inflation will pick up in the US."

Ayala Land, the nation’s largest property developer, fell 50 centavos, or 4.7 percent, to P10.25. SM Investments, which owns the nation’s largest shopping mall operator, fell P6 or 2.7 percent, to P218. – AFP

 

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