RP stocks lower on Wall St fall, seen hike in BSP rates

ABS-CBN News

Posted at Jun 03 2008 01:17 PM | Updated as of Jun 03 2008 09:17 PM


Stocks fell on Tuesday as investors turned cautious following Wall Street's decline overnight due to more signs of weakness in the US economy, and ahead of a widely anticipated hike in the central bank's interest rates.

A squeeze in US manufacturing activity in May and construction spending in April, along with persistent credit problems, sent the Dow Jones industrial average down 1.06 percent or 134.50 points on Monday.

At home, analysts said investors have been worried that the central bank would raise its key interest rates in a meeting on Thursday, the same day the official data on May inflation would be released.

Four out of five economists polled by ABS-CBN were expecting the Bangko Sentral ng Pilipinas (BSP) to tighten monetary policy by at least a quarter of a percentage point to curb runaway inflation.

A median estimate in another poll showed inflation in May probably accelerated to 8.8 percent from a three-year high of 8.3 percent in the previous month. The BSP sees year-on-year May inflation to fall within a range of 8.8-9.6 percent.

The composite index fell 43.09 points or 1.5 percent to 2,782.80.

The broader all-share index lost 20.91 points or 1.2 percent at 1,725.73.

Losers beat gainers, 56 to 31, while 60 stocks were unchanged.

A total of 2.56 billion shares worth P1.97 billion were traded.

"Uncertainties overseas, a rebound in oil prices and the imminent increase in the central bank's rate cut are among the fears of the market," said Astro del Castillo of First Grade Holdings.

"Investors are also worried about a further uptick in inflation, which continues to dampen spending and corporate earnings."

Index heavyweight Philippine Long Distance Telephone Co. dropped P35 or 1.3 percent to P2,570.00.

Ayala Corp, the nation's most diversified conglomerate, plunged P17.50 or 4.96 percent to P335.00.

Interest-rate sensitive property and banking issues also ended in negative territory.

Leading property developer Ayala Land Inc. retreated P0.50 or 4.7 percent to P10.25 while another sector giant, Megaworld Corp., fell P0.06 or 3.1 percent to P1.90.

Banco de Oro Unibank tumbled P1.50 or 3.1 percent to P47.

Bank of the Philippine Islands of the Ayala Group closed down P1.50 or 2.8 percent at P52.50.