RP stocks flat ahead of inflation data, BSP meet


Posted at Jun 02 2008 01:14 PM | Updated as of Jun 02 2008 09:14 PM

Stocks ended flat on Monday as investors refrained from taking aggressive positions ahead of the release of inflation data and the central bank's decision on its interest rates later this week.

"A possible hike in the central bank's interest rates may siphon off liquidity in the market," said Astro del Castillo, First Grade Holdings managing director.

The composite index lost 1.55 points or 0.05 percent at 2,825.89.

The broader all-share index rose 4.85 points or 0.3 percent to 1,746.64.

Market breadth was positive, with gainers beating losers at 46 to 39. There were 53 stocks unchanged.

A total of 1.02 billion shares worth P2.9 billion were traded.

"Investors are cautious and waiting for the real score on inflation. Plus, the central bank is widely expected to raise its interest rates," said Jonathan Ravelas, Banco de Oro chief strategist.

Inflation in April touched a three-year high of 8.3 percent, pushed by fuel and energy items. This brought average inflation for the first four months of the year to 6.2 percent, above the central bank's 2008 target of 3.0-5.0 percent.

To curb soaring inflation, Ravelas said the central bank might raise its benchmark interest rates by a quarter-percentage point.

In an environment of high interest rates, investors usually shift from the stock market to interest-bearing investments for better returns.

Market heavyweight Philippine Long Distance Telephone Co. fell P5.00 or 0.2 percent to P2,600.00.

Ayala Corp., the country's biggest conglomerate, retreated P2.50 or 0.7 percent to P350.00.

SM Investments Corp. rose P10 or 4.0 percent to P260.00.

Manila Electric Co. (Meralco) jumped P1 or 1.6 percent to P62.50 after the Court of Appeals issued a temporary retraining order last Friday in favor of the Lopez-controlled Meralco board.

The TRO barred the Securities and Exchange Commission from nullifying proxy votes that gave the Lopez group control over the power distributor.

Petron Corp. soared P0.40 or 7.8 percent to P5.50, reversing last week's losses due to reports that London-based Ashmore Group, which is set to buy a 40-percent stake in the oil refiner, would put off a mandatory tender offer to public shareholders.

"Under regulatory rules, Petron or any company at that, which has offered to buy at least 35 percent of a listed company must conduct a tender offer to public investors at the same price," said del Castillo.