050107: Philippine stocks drop on slower US economy

By Luzi Ann Javier

Bloomberg

Philippine stocks fell on concern slowing economic growth in the US may cap demand for exports from the Southeast Asian nation. Ayala Corp. led the decline. “Investors are not comfortable with a slowdown in the US economy,” said Jonathan Ravelas, market strategist at Banco de Oro in Manila. “That will have an impact on our exports and consumer spending.” The Philippine Stock Exchange index lost 47.65, or 1.4 percent, to 3270.73 at the noon close in Manila. Losers outnumbered gainers, 68 to 35, with 56 stocks unchanged in the broader market. The economy in the US, the Philippines’ biggest export market, expanded at an annual rate of 1.3 percent in the first quarter, the US Commerce Department said on April 27. That’s the slowest pace in four years. Ayala, the fourth-biggest listed company, fell P15, or 2.4 percent, to P600. Its unit Ayala Land Inc. dropped 75 centavos, or 4.1 percent, to P17.50. Megaworld Corp., one of the nation’s two biggest builders of residential and office towers, declined 20 centavos, or 5.8 percent, to P3.25. Concern by some investors that the government may borrow more than planned to finance its budget deficit also contributed to the decline in stocks. “It’s a crowding out effect,” said Jose Vistan, head of research at AB Capital Securities Inc. in Manila. “If the government borrows too much, the cost of borrowing for companies will go up.” The Philippine government’s net borrowings for the first quarter exceeded its target by P1.93 billion, according to news reports, citing Department of Finance data. Philippine Long Distance Co., the nation’s biggest company by market value, dropped P15, or 0.6 percent, to P2,540. The company plans to refinance about $100 million of debt with new peso borrowing after the elections, chairman Manuel Pangilinan said on March 7.

 

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