MANILA, 1 July — The Philippine stock market retained its previous bearish mood which was aggravated by a weakening peso and a fragile economy, and the continuing hostage drama in the southern part of the country, as well as reports of instability in Metro Manila.

“We still have unbelievers dominating trading. This is mainly due to the weak peso and the peace and order problem,” said 2TradeAsia.com research chief Grace Cerde?a. The composite index therefore closed at 1,410.07 points, having lost 29.7 points or over 2 percent. Market turnovers were hefty and mixed.  Value turnover surged 62.7 percent to P4.75 billion ($91.36 million).  In contrast, volume turnover lost 16.09 percent as only 4.33 billion shares changed hands.

“What can we expect? We have a litany of problems especially in peace and order. We have yet to achieve political stability. A series of [travel advisory] announcements by different governments to avoid the Philippines are not helping the economy, particularly the stock market,” said A&A Securities research head Astrolito del Castillo.

“There were disappointments as the US Federal Reserve’s cut in US interest rates was lower than expected. Some investors had hoped that the Fed would cut rates by half a point as it had done five times this year,” Jose Vistan, Jr., analyst at AB Capital Securities Inc., added.

“Local interest rates will have a hard time mimicking their US counterparts. The peso has been volatile while real rates are already at unattractive levels. The Bangko Sentral ng Pilipinas (Central Bank of the Philippines) will most likely keep rates unchanged as long as inflation remains above the 6.5 percent level. As an alternative, the central bank has resorted to moral suasion, asking banks to lower their spreads,” Vistan said.

“For today, local shares will continue to be hounded by local political and economic concerns. Recent economic releases like the April imports and manufacturing numbers have provided some encouragement. However, the lack of overall confidence still calls for cautious trading,” Vistan said.