Share prices plunged 2.3 percent yesterday, dragged down by a sell-off on Wall Street on worries over a widening credit crisis, dealers said.
Shares fell across the board, with improved earnings overshadowed by concerns about the conditions of the US economy, the biggest market for Philippine goods, they said.
The composite index fell 85.29 points to 3,618.37, off a low of 3,608.16, on a volume of 4.1 billion shares worth P4.5 billion.
Decliners overwhelmed advancers 125 to eight, while 24 stocks were flat.
It was the index’s second big drop in less than a week after last Thursday’s 96.16-point slump.
The broader all-share index fell 55.22 points or 2.4 percent to 2,233.48.
The Dow Jones industrial average fell more than 220 points Friday after major US banks — Bank of America Corp., JPMorgan Chase Co. and Wachovia Corp. — all warned they might book further losses in the fourth quarter from subprime mortgages.
“Cautious trading is expected to continue although investors are increasingly hopeful that the central bank will further cut interest rates on Thursday,” said Lawrence de Leon at Accord Capital Equities.
The Philippine central bank is now widely seen to be biased to cut key interest rates further, with economists expecting a quarter-percentage-point cut at Thursday’s policy meeting.
“This appears to be the most opportune time for the central bank to deliver its second — and we think its last — 25-basis-point rate cut, taking the overnight borrowing rate to 5.50 percent,” DBS Bank said in a note.
“Once again, as was the case with the surprise cut at the previous meeting on Oct. 4, the need to temper the peso’s appreciation — via a reduction in the dollar-peso yield spread — will probably be the main motivation,” the Singapore-based bank said.
“We see good reasons for the government to allow the peso to continue appreciating at a faster pace than the Malaysian ringgit and the Thai baht,” Credit Suisse said in a note.
“The central bank uses the peso to contain inflation, which may come under pressure from rising oil prices.”
A rate cut could provide relief to a market nervously awaiting indications of how bad the credit crisis has affected the US economy.
“The subprime problem seems to have turned for the worst, with indications that the fallout may be spreading beyond the US financial system,” said Francisco Liboro, president of PCCI Securities.
Market leader Philippine Long Distance Telephone Co. retreated P35 to P2,960, after last Friday’s 0.3-percent gain.— AFP