Market snaps five-day rally after BSP rate hike

Share prises snapped a five-day rally yesterday as investors took profit following the Bangko Sentral ng Pilipinas (BSP) decision to raise its closely watched overnight rates.

The 30-company Philippine Stock Exchange Index lost 5.76 points, or 0.3 percent, to close at 1,959.51, after the index rose three percent over the past five sessions.

The broader All Shares Index slipped 1.52 points to 1,186.68, after gaining 1.14 points Thursday.

Fitzgerald Aclan, research head at Wealth Securities, said the market’s decline was due to the Central Bank’s decision to raise overnight rates by 25 basis points, marking the second rate increase this year, in a move to stem inflation and ease pressure on the peso as the difference between local and US interest rates narrows.

Higher interest rates make fixed-income securities more attractive to investors, while companies will bear higher borrowing costs that could pinch profit, analysts said.

Losers beat gainers 49 to 19, with 55 issues unchanged.

The day’s most actively traded stock, Aboitiz Equity Ventures, lost 1.9 percent to P5.10, as profit-taking continued after it hit a 52-week high of P5.40 earlier this week.

Ayala Corp. lost 2.5 percent to P292.50, while Bank of the Philippine Islands shed 0.9 percent to P53.

Several blue chips bucked the trend and limited the market’s losses. Philippine Long Distance Telephone Co. rose 0.3 percent to P1,635, SM Investments gained one percent to P206 and oil refiner Petron Corp. advanced 1.5 percent to P3.30.

"Although the central bank rate hike was largely expected, investors still used it as an excuse for profit-taking," said Lawrence de Leon of Accord Capital Equities.

The central bank raised its key interest rates by 25 basis points on Thursday in response to rising inflation and after another interest-rate increase of 25 basis points by the US Federal Reserve earlier in the week.

SM Prime Holdings lost 10 centavos at P7.40.

San Miguel’s A- and B-shares were steady at P65.50 and P93.50 respectively.

"The outlook isn’t too rosy," said Luz Lorenzo, research head at ATR-Kim Eng Securities in Manila. "Growth prospects are dampened with interest rates rising. Our trading partners are affected by the same factors.’’

Demand for exports may weaken following reports that the US economy, the Asian nation’s second-largest overseas market, is weakening, according to Lorenzo. A US Labor Department report showed initial applications for unemployment benefits rose to 432,000 last week, the most since July 2003. – AP, AFP