Philippine stock index drops 33.94 points

MANILA, 12 August — Philippine stock trading got a shot in the arm and rose in the last trading day last week, but this was not enough to counteract the slump it had gone into for several weeks due to the absence of positive news that led foreign players to consider transferring their holdings to other Asian countries with more potential for gains. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The Philippine Stock Exchange (PSE) reacted positively to the appreciation in the value of the peso vis-a-vis the dollar, mostly because the government cracked down on currency speculation.

The market barometer actually registered a fall of 33.94 points or 2.55 percent to 1,294.23 points.

On the last trading day last week, the peso opened at 52.950 pesos=$1 before rising steadily against the US currency. It touched a high of 51.70 pesos=$1 during midday trading before closing at 51.850 pesos=$1 a dramatic 1.15 pesos gain from Thursday’s close of 53 pesos to the dollar.

On the PSE, value turnover rose 90.42 percent to 3.64 billion pesos ($70.4 million). Volume turnover fell 10.54 percent to 2.55 billion pesos.

UCPB Trust fund manager Vanessa Lim said foreign investors had been trimming their holdings since the start of the trading week.

“Foreigners are cleaning up their books as there is little evidence that we will see any kind of turnaround (in the economy) in the near term.”

“Money is moving out to other places, investors believe there are better prospects elsewhere,” said Efren Cruz, fund manager of the Mutual Fund Management Co. of the Philippines.  “A lot of the foreign houses are underweighting the local market...It’s exacerbated by the drop in the United States, and Asian markets are also taking a hit,” said Oliver Plana, analyst of Asiasec Equities Inc.

Fortunately these foreign brokers did not sell-off all of their holdings.

However, analysts said “the market has been seesawing back and forth trying to find excuses to either buy or sell...but there are really no firm signals either way,” World Wide Investment Management Co. of the Philippines fund manager Vincent Lazatin said.

“Everything is so tilted to the negative because the country’s growth is so lackluster and corporate earnings are also under pressure,” said Equitable-PCIBank fund manager Edison Yap. “When you also look at stock valuations, they’re not good.”

Investor interest was also undermined by Japanese businessmen’s warning Monday that political, security, and labor concerns discourage investments from Japan to Manila.

While the highly publicized military intelligence allegation that Sen. Panfilo Lacson held huge dollar deposit accounts overseas isn’t yet a full-blown matter, it raises concerns that the administration of President Gloria Macapagal-Arroyo may be trying to discredit its political opponents, traders said. Lacson is an ally of deposed leader Joseph Estrada.

Other traders said the time of year also had something to do with the market’s poor performance.

“The ghost of August (a traditionally weak month for the market) is haunting us,” A&A Securities research head Astro del Castillo said.  “Domestic worries are still there...the peace and order situation, and the peso,” he said.

Del Castillo expects further downside next week.

“I do not see any incentives to push the market higher...if we break 1,300 we could test 1,270 points, the next major support.”

The coming week doesn’t promise anything different and Lazatin said he could see no immediate incentives on the near term horizon to rejuvenate the market.

“From a chartist view point and in the absence of any good news either domestically or in the United States, the bias for the market remains downward,” he said, adding technically the next significant support mark for the main index is 1,246 points.

“There’s a lack of impetus to trigger investors to get back into the market. The market may have a downward bias within the near term,” Plana added.

Lazatin added that first half corporate results to date have also failed to excite.

“In the next few days, people are anticipating poor second-quarter earnings which could trigger another round of selling,” Henry Ong, vice-president for sales at KGI Securities Inc., said.

Other analysts said there might be an increase in stock trading as the market continues the upward trend it established Friday. “This is entirely possible especially if the peso value continues to improve,” they said.