Index dips on weak PLDT, fresh concerns on EVAT

Share prices closed 0.29 percent lower yesterday, weighed down by losses in market leader Philippine Long Distance Telephone Co. (PLDT) and ahead of a Supreme Court (SC) ruling on the expanded value added tax (EVAT) law, the centrepiece of the government’s fiscal policy, dealers said.

They said fresh concerns over the EVAT law, which has been held up by legal challenges from the opposition, combined with the likelihood of a further rise in interest rates to dampen sentiment.

The Philippine Stock Exchange composite index fell 5.68 points to 1,947.46 after trading between 1,941.48 and 1,953.14. Volume reached 306.55 million shares worth P741.26 million.

Losers led gainers 40 to 18, with 55 stocks unchanged.

"There’s a lot of hesitation in the market. Investors are waiting for the court’s ruling on the EVAT," said Jonathan Ravelas of Banco de Oro Universal Bank.

The Supreme Court is expected today to rule on whether to lift a three-month old freeze order on the new VAT.

On Sept. 1, the court upheld the constitutionality of the statute which expands VAT coverage to include previously exempt sectors such as power generation and petroleum products but left an earlier freeze order in place pending further challenge.

Ravelas said the likelihood that the central bank will further raise key interest rates by at least another quarter percentage point before the year ends also weighed on the market.

Dealers said that in addition, security concerns resurfaced after the police on Friday used fire hoses to break up a protest march led by a former vice-president and other officials against President Arroyo.

It was the second time in as many days that police have used fire hoses to disperse protesters calling for the resignation of Arroyo, sparking fresh concerns about political stability.

PLDT lost P 20 to P1,660.

Bank of the Philippine Islands declined 50 centavos to P51 while affiliate Ayala Land retreated 10 centavos to P8.80. Parent Ayala Corp. ended down P2.50 at P290.

A shares of San Miguel, limited to Filipino investors, were unchanged at P65. San Miguel B, available to all buyers, closed up P1 at P92.50.

"There is no encouraging news to hold on to stocks," said Astro de Castillo, managing director at Manila-based First Grade Holdings Inc., a financial management and advisory company. "The market sentiment is very anemic.’’

SM Prime, the nation’s largest shopping mall operator, lost 10 centavos, or 1.4 percent, to P7.30.

The government has said it will probably miss even the low end of its 5.3-percent to 6.3-percent growth target. – AFP