Phisix falls below 1500-pt support level

Share prices tumbled to a new 19-month low yesterday hounded by worries over the country's peace and order situation and a possible surge in domestic interest rates resulting from the Bangko Sentral ng Pilipinas' (BSP) decision to boost key rates, traders said.

The 30-company Philippine Stock Exchange Index fell 42.68 points, or 2.8 percent, to 1,478.68, its lowest level since Oct. 20, 1998. Yesterday's losses added to Thursday's 12.69-point decline.

The broader All Shares Index rose 0.76 point to 612.65 after retreating 8.34 points Thursday. Losers beat gainers 75 to 11, with 29 issues unchanged.

Hardest hit by the selldown were interest-rate sensitive property and banking issues.

"The central bank's rate hike will put pressure on wider interest rates, particularly on treasury bill rates," said Cilette Liboro, research head at Orion-Squire Securities.

Also hounding stocks as well as the peso, analysts said, were the continuing conflict in Mindanao in the southern Philippines and bomb blasts that rocked metropolitan Manila, the latest of which was in a shopping mall in the financial district of Makati on Wednesday.

Ivy Cayayan, research head at G.K. Goh Securities, said the BSP will likely be forced to raise interest rates further if the speculative attack on the peso doesn't abate, and that will hurt stocks eventually.

Higher interest rates discourage corporate expansion and increase the cost of debt payments.

Liboro said the Philippines' recent downgrade in the Morgan Stanley Capital Index also weighed on local stocks, although not as heavily as the political concerns and the BSP rate increases.

Cayayan said the downgrade had been expected by the market, and foreign funds had already lightened their Philippine holdings before the actual announcement.

In other markets, trading closed mixed with the Dow Jones index inching up 7.54 points while the tech-heavy Nasdaq counter dropped 106.25 points on low trading volume as investors focused on negative reports concerning telecoms and software stalwarts.

Asian markets likewise moved in different directions: Hong Kong, Taiwan, Thailand and Kuala Lumpur stocks ended the week higher while Tokyo, Singapore, Korea and Indonesian stocks went down.

In the Philippines, leading the selldown were index heavyweights PLDT, Meralco, Ayala Land, SM Prime and Metrobank, PLDT chopped off P30 more to end at P695 while Meralco B lost P2.5 to P58.5. In a press briefing yesterday, Meralco chief operating officer Jesus Francisco said they were able to arrest systems losses to a more manageable 11 percent in April, the lowest in 20 years.

Although still below the ideal 9.5-percent cap, the systems loss -- or the percentage of losses incurred in systems distribution due to pilferage and technical deficiencies -- Francisco said this was a vast improvement from the previous years as the country's biggest power retailer intensified its clampdown on illegal connections and modernized their aging facilities.

Other losers include ABS-CBN's PDR, BPI, BW Resources and new Internet stock iVantage Equities, which succumbed to profit taking after gaining ground the previous day when it announced a new management team to lead the company into its "new economy" ventures.

Meanwhile, Sun Life and Manulife gained P40 and P30, respectively, Manulife reported a 15-percent improvement in net income to C$225 million during the first quarter, on the back of a 44 percent surge in premiums and deposits values at C$6.525 billion. While Sun Life said its company's board approved the repurchase of up to 21.084 million common shares representing five percent of the outstanding shares under a "normal course issuer bid" within a one-year period starting May 15, 2000.

In other corporate news, the restructuring in debt-laden mail and property firm Uniwide Holdings takes a new angle with the spin-off of two new subsidiaries -- one a retail company and the other in realty -- to transfer the company's prime assets and facilitate the entry of its French partner Casino Guichard-Perrachon.

This was among the conditions set before Casino invests P3.57 billion in fresh equity to the new, debt-free companies. The investment proceeds will then be used to settle the estimated P11-billion obligations of the Uniwide Group owed to a consortium of banks.