Local stocks dragged down by fresh worries about recovery

By Maiki Oreta, ABS-CBN News

Posted at Aug 24 2010 12:17 PM | Updated as of Aug 25 2010 02:12 AM

 

MANILA, Philippines - Local stocks dropped on Tuesday, in line with lackluster trading in Asia, as investors worried anew over stalling global economic recovery.

US stocks gave back gains on Monday in choppy trading as a gloomy economic outlook overshadowed positive corporate news.

At home, the bloody ending Monday night of a 12-hour hostage-taking incident in Manila, helped pull down the market.

The main index of the Philippine Stock Exchange snapped its 6-day winning streak, losing by 2.3% to 3,530.39.

The broader all-share index dropped by 1.6% to 2,242.98.

Decliners trounced advancers, 102 to 27, while 39 stocks finished unchanged.

A total of 896.794 million shares worth P4.2 billion changed hands.

Astro del Castillo, managing director of First Grade Holdings said the market was hit by profit-taking just like its regional peers.

"We've been up almost 18% to date. We are still leading compared to other Asian markets. The market needs to take a breather."

Del Castillo said market fundamentals remain intact despite the hostage crisis.

Bank of the Philippine Islands (BPI), the banking arm of conglomerate Ayala Corp., shed 0.3% to P47.85.

BPI had listed its P10-billion stock rights offer which was oversubscribed by 41%.

The bank said the fund raising is meant to prepare for possible growth opportunities as well as to strengthen the bank’s capital position.

BPI President Aurelio Montinola attributed the strong demand to the generally optimistic outlook about the local banking sector.

"We have a good first half, which was 6% over last year, but for the second half we should do much better," said Montinola.

BPI's first half net income stood at P5.6 billion due to improvement in both net interest and non-interest income.

Other stocks also ended in red on Tuesday.

SM Investments Corp., the most actively traded stock by value, lost 0.8% to P490 apiece.

Lender Metropolitan Bank and Trust Co. also fell 1% to P65.30.

Citiseconline head of research April Lee-Tan said the short-term outlook for the market is bearish.

Tan said she expects the market to be affected temporarily by the negative reactions to the bloody ending of the siege by a former Manila policeman of Chinese nationals.

The hostage-taking, which resulted in the death of 8 Hong Kong residents, was watched by millions on live television.

"In the short term, there could be some more negative reaction to it. But as long as it doesn't happen on a consistent basis, confidence will return and investors will view this as an opportunity to get back into the market," said Tan.