Index drops as market remains in consolidation phase

Share prices closed flat yesterday as investors awaited the Bangko Sentral ng Pilipinas’ (BSP) interest rate decision later in the day, dealers said.

The composite index slipped 2.59 points to 2,833.27, after moving between 2,824.07 and 2,839.17.

The broader all-share index fell 2.76 points to 1,766.59.

Losers were slightly ahead of gainers 49 to 48, while 69 stocks ended unchanged.

A total of 1.68 billion shares worth P4.1 billion changed hands.

"The market remains in a consolidation phase in the absence of new leads," said James Lago of Westlink Global Equities.

He added investors were cautious given what he described as "mixed signals on the economic front," with world oil prices again on an uptrend while the Philippine central bank expects inflation to continue easing next year.

Oil prices were firmer in early Asian trading hours after US energy reserves declined and because of expectations that the Organization of Petroleum Exporting Countries (OPEC) will announce this week another round of production cuts.

Investors believe the central bank is now biased towards policy easing, but they are divided as to when a rate cut will be implemented.

"Easing inflation and a firmer peso suggest that the central bank now has flexibility in monetary policy," Singapore-based DBS Bank said in a market note.

"(But) the central bank is more likely to adopt a conservative stance by maintaining its policy rate, and take its cue from the (US central bank) to lower rates gradually only in the first half of 2007."

Megaworld Corp., the country’s largest office and residential condominium builder, fell 2 centavos, or 0.9 percent, to P2.24, trimming this month’s gain to 9.3 percent. Philippine Long Distance Telephone Co. (PLDT), the biggest company by market value, declined P15, or 0.6 percent, to P2,415, following a 2.8 percent, six-day loss. The stock gained 29 percent in the three months to Nov. 30.

"The market is coming from a strong rally since September so it’s prudent to consolidate those gains," said Jovis Vistan, an analyst at AB Capital Securities Inc. in Manila. "There are also no compelling trades to make and some fund managers are already in a holiday mood."

Manila Electric Class A shares, lost 50 centavos, or 0.9 percent, to P53.50, shaving this month’s gain to 67 percent. Its Class B shares, which have no ownership restrictions, declined 50 centavos, or 0.9 percent, to P54.50, trimming its two-week gain to 68 percent.

Separately, PNOC Energy, which operates the world’s single biggest geothermal field, fell 40 centavos, or 8.8 percent, to P4.15. The stock gained 42 percent Wednesday following the company’s P16.7-billion initial share sale earlier this month. – AFP