050407: Shares drop on inflation worries

By Ian C. Sayson

Bloomberg

PHILIPPINE banking stocks fell, led by Metropolitan Bank & Trust Co. and Banco de Oro on speculation inflation rose at a faster pace in April. “A rise in inflation will create pressure on interest rates and the cost of doing business,” said Astro del Castillo, managing director of First Grade Holding Inc., a financial management and advisory company in Manila. “It is a good time to lighten your load in equities.” Limiting declines, energy and consumer stocks rose on speculation demand for electricity and consumer spending will rise after the government said economic growth will accelerate in the next three years and Texas Instrument Inc. said it will invest $1 billion in the country. The Philippine Stock Exchange index fell 0.46, or less than 0.1 percent, to 3271.53 at the close in Manila, after gaining as much as 0.7 percent earlier Thursday. Consumer prices in April probably rose 2.4 percent from a year earlier, according to the median estimate of 13 economists surveyed by Bloomberg News, accelerating from a seven-year low of 2.2 percent in March. The National Statistics Office report is due today. Metrobank, the nation’s largest lender by assets, fell P2.50, or 4 percent, to P59.50, its lowest since March 21. Banco de Oro, which will merge with Equitable PCI Bank and create the nation’s third-biggest lender by asset, lost P1.50, or 2.5 percent, to P58.50, its biggest loss since March 14. Equitable PCI Bank declined P2, or 1.9 percent, to P103, its lowest in almost five weeks.   Improving fundamentals MANILA Electric Co.’s Class A shares, equity reserved for Filipinos in the nation’s largest electricity retailer, added P1.50, or 2 percent, to P76, rounding a 14-percent,  nine-day gain. Its Class B shares, which have no ownership restrictions, rose P1.50, or 2 percent, to P76.50, the highest since February 23. The government expects the economy to expand between 6.2 percent and 6.8 percent next year, finance undersecretary Gil Beltran said Wednesday.         That compares with last year’s 5.4 percent growth and a government target of as high as 6.7 percent this year. Economic growth will probably be between 6.3 percent and 6.99 percent in 2009 before reaching a range of 6.54 percent to 7.37 percent in 2010, Beltran said. “The market’s overriding theme is the country’s improving economic fundamentals,” said Grace Cerdenia, head of research at 2TradeAsia.com in Manila. The Texas Instrument investment “is an affirmation of investors’ confidence in the Philippines and the government’s fiscal reform.” SM Prime Holdings Inc., the nation’s largest shopping mall operator, climbed 25 centavos, or 2.2 percent, to P11.75. Jollibee Foods Corp., the nation’s largest fast-food operator, gained P2, or 3.9 percent, to P53.50. Separately, Megaworld Corp., one of the nation’s two biggest builders of residential and office towers, gained 5 centavos, or 1.5 percent, to P3.40. The company said it will start the construction of three residential towers for P3.5 billion in its Manhattan Garden City development in Manila. Each tower will have 400 units, it said. Shares worth P3.96 billion were traded, 4.1-percent less than the six-month daily average. One stock rose for each that fell in the broader market.

 

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