PHILIPPINE stocks on Wednesday fell for a second day in three on concerns the Bangko Sentral ng Pilipinas (BSP) may raise borrowing costs to support the peso. Equitable PCI Bank (EPCIB) suffered its biggest one-day drop (see graph on B1).
The Philippine Stock Exchange Index lost 11.78 points, or 0.5 percent, to 2,252.58 at the noon close in Manila as some investors may have shifted money into fixed-income securities as yields rose more than 3 percentage points for four days until Tuesday.
“Bond yields have been going up and perhaps they are becoming more attractive now to investors than stocks,” Rico Gomez, who helps manage about $1 billion at Rizal Commercial Banking Corp., said. Bond yields fell Wednesday.
Rising yields and a declining peso may “influence” the BSP to “eventually” raise its benchmark rates, Gomez said.
Exchange rate movements will be a factor in future policy rate decisions, BSP Governor Amando Tetangco said May 11, after the US Federal Reserve raised its benchmark rate to 5 percent. Concern about slowing demand for assets in riskier markets such as the Philippines dragged the peso to its lowest since January.
Higher rates may reduce the value of bonds owned by banks, brokers and insurers, and also crimp demand for mortgages and loans.
EPCIB, the nation’s third-largest lender by assets, fell P11, or 16 percent, to P60. Chairwoman Corazon dela Paz said at a shareholder meeting Wednesday after the market closed that a merger offer made by Banco de Oro in January had lapsed.
Banco de Oro, the country’s seventh largest lender by assets, closed unchanged at P37.
Metropolitan Bank & Trust Co., the Philippines’ No. 1 bank, retreated P1, or 2.6 percent, to P37.50. Banco de Oro, the sixth largest, closed unchanged at P37.
Concerns over higher interest rates also weighed on property stocks Ayala Land Inc., which fell 2 percent to P12.50, and SM Prime, 2.6-percent lower at P7.50.
Limiting the market’s loss was bargain hunting in Globe Telecom, up 5.4 percent at P885.
Philex Mining Corp., the nation’s largest miner of gold, silver and copper, gained after metal prices recovered. Both Class A and B shares of Philex Mining rose 20 centavos, or 5.3 percent, to 3.95 pesos. Class A shares are strictly for Filipinos, while foreigners can own B shares.
Gold and copper rebounded as investors bet commodities will outperform stocks and bonds. Gold futures for June delivery climbed 2.4 percent, the biggest percentage increase since May 9.
Copper for delivery in August rose as much as 4 percent in Shanghai.
“Funds open to the volatility of commodity prices see an opportunity in the 12-percent bounce in copper prices (Tuesday),” Junie Banaag, who helps manage over P1.1 billion (US$21 million) in equities at First Metro Investment Corp., said.
A measure of mining and oil stocks advanced by 2.7 percent to 4556.97 Wednesday. With AP
http://www.businessmirror.com.ph/0525/comp04.php
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