Index tumbles on political woes, US slowdown

Share prices fell sharply yesterday on worries over the country’s continuing political crisis and the likely adverse impact of a slowdown in the US economy on the Philippines, traders said.

The 30-company Philippine StockExchange Index fell 18.58 points, or 1.3 percent, to 1,386.25 after declining 13.21 points Wednesday. Philippine financial markets were closed Thursday for a holiday.

Losers led gainers 46 to 11, with 37 issues unchanged.

The broader All Shares Index, however, rose 18.88 points to 727.63 after sliding 1.79 points Wednesday. A rise in share prices of Canadian insurance companies Manulife and Sun Life, which are also listed in Manila, drove the index higher despite the market’s general decline.

Leading the downward trend were blue chips Philippine Long Distance Telephone Co., Ayala Corp. and Manila Electric Co., or Meralco, PLDT fell P5 to P800. Ayala Corp. declined 10 centavos to P710 and Meralco’s widely traded B shares slipped P1 to P43.50.

Another major loser was Belle Corp., which fell 12 centavos to 66 centavos after the Supreme Court late Wednesday ordered one of its subsidiaries to stop "jai alai" gambling operations.

Aside from continuing concerns over political uncertainty sparked by corruption allegations against President Joseph Estrada, traders said the impact of a slowdown in the US economy on Philippine exports also spooked the market.

On Wednesday, the Commerce Department said the US economy slowed dramatically during the summer, with a growth rate of just 2.4 percent, the weakest pace in four years. The United States is still the Philippines’ largest market for exports, one of the few sectors that is doing well in the Philippines.

Astro del Castillo, research head of A&A Securities, said the political crisis remains the main force driving share prices lower.

"It’s because of the political overhang," he said.

Estrada’s impeachment trial is set to start Thursday. Corruption allegations against Estrada have triggered the worst political crisis in his 29-month presidency and have had a devastating impact on market.

Eastern Securities Development Corp. research director Lourdes Cinco said investors didn’t want to purchase shares ahead of the weekend because of the uncertainty triggered by growing anti-Estrada demonstrations.

"People don’t want to be caught flat-footed in case something happens," said Cinco, alluding to any violence in the anti-Estrada protests.

Analysts expect investors to start searching for bargains next week as the index approaches its initial support of 1,377. But they doubt the market’s downtrend can be reversed until the political crisis is resolved.

Turnover, though, was healthier, breaching past the P1-billion mark after a week on the lean side, with trades averaging about P500 million. – Conrado Diaz