Stocks fall to 3-week low as telecom shares drop

Share prices fell yesterday for the fifth straight session, hurt mostly by declines in telecommunications stocks.

The benchmark 30-company Philippine Stock Exchange Index fell 12.79 points, or 0.6 percent, to a three-week low of 1,966.33 following Wednesday’s 0.3 percent fall. The index has lost 3.5 percent since Monday.

Philippine Long Distance Telephone Co. was the most actively traded stock, down 0.9 percent at P1,610, in step with the 1.6 percent loss suffered by the company’s American Depositary Receipts in New York Thursday.

Globe Telecom lost 2.7 percent to P28.

Dealers said many investors also stayed on the sidelines ahead of the Supreme Court’s ruling on the expanded value-added tax (EVAT) law, which is expected to be announced before the month ends.

The court froze the tax collection last month amid a legal challenge on the constitutionality of the statute, which aims to shore up the government’s fragile revenue base.

Westlink Global Equities chairman Rommel Macapagal blamed the market’s fall on the peso’s depreciation against the dollar and concern over the effects of high oil prices on second-half prospects.

The market, he added, also remains concerned about the fate of the expanded value added tax law, which was suspended by the Supreme Court last month. It is a key element in the government’s fiscal reform program.

"There’s still selling momentum," Macapagal said.

"High oil prices, which are likely to result in a higher inflation rate in the coming months, continue to dampen sentiment," said Lawrence de Leon of Accord Capital Equities.

"There’s little interest to trade also because everybody is awaiting the Supreme Court’s verdict on the VAT law," he added.

The oil crunch has triggered concerns that energy prices would rise further if the Supreme Court eventually allows the sales tax to be collected, dealers said.

At the same time, however, market players are concerned that if the law is rejected, it may prompt a downgrade of the country’s credit ratings.

Other active stocks included San Miguel B, which lost 0.5 percent to P98, Banco de Oro, off 1.5 percent at P33 and Ayala Corp., lower by 0.8 percent at P310.

Philippine National Bank rose 1.3 percent to P40 after the government said Thursday that tycoon Lucio Tan’s group will match a bid for the substantial stake in the country’s sixth-largest commercial bank that was auctioned last week, a move that will allow the tobacco and beer magnate to regain control of the bank.

Decliners led gainers 46 to 13, while 56 stocks were unchanged. – AP, AFP