They said the market clearly welcomed news that the government had a budget surplus in April – the first time in four years – but there was no follow-through.
The composite index was down 6.36 points to 1,886.73 after moving between 1,873.42 and 1,894.31. Volume was 342 million shares worth 879 million.
The all-shares index fell 2.71 points to 1,152.83.
Losers led gainers 47 to 24, with 52 stocks unchanged.
"Property stocks have been rising gradually over the past few weeks and investors are now locking in some of those gains," said Ron Rodrigo of Accord Capital Equities.
Dealers said concerns over the impact of the new value-added tax legislation, higher public transport fares and a possible increase in wages are broadly weighing on market sentiment and keeping any overenthusiasm in check.
Rodrigo said sentiment may also have been undermined by accusations that the husband and son of President Arroyo are allegedly linked to the operations of an illegal numbers game.
Conglomerate SM Investments was the most actively traded stock but remained unchanged at P248.
Market leader Philippine Long Distance Telephone Co. (PLDT) rose 15 pesos to 1,465 following gains in its New York-listed shares, helping limit the overall downturn.
Ayala Land fell 40 centavos to P7.20, Filinvest Land was down four centavos at P1.40 and shopping mall developer SM Prime retreated 10 centavos at P7.50.
Food and beverage giant San Miguel Corp.’s A and B shares were unchanged at P58.50 and P85.50 respectively.
"The main concern now for the market is the quality of second-quarter corporate earnings," said DA Market Securities President Nestor Aguila. "With the new round of taxes, the question is which company can hold its fort and which one will have to adjust."
Last week, Congress ratified long delayed amendments to the value added tax, which form the centerpiece of the government’s fiscal reform program. One of the amendments raises the corporate income tax to 35 percent from 32 percent starting next year, before it is lowered to 30 percent in 2009.
While the amendments are expected to generate additional revenue for the government, analysts are concerned about their impact on corporate finances.
Such concerns outweighed Thursday’s news that the government posted a P3.3-billion budget surplus in April, its first in four years. – AFP