Index tumbles on rate woes, state fund sell-off

Share prices fell for the second day yesterday as investors fretted over prospects of higher interest rates and talk of heavy selling by government financial institutions.

The benchmark 30-company Philippine Stock Exchange Index fell 22.65 points, or 1.1 percent, to 2,099.26, adding to its 1.2 percent loss Tuesday.

All subindexes retreated. Decliners led gainers 58 to 23, while 56 stocks were unchanged.

Ayala Land contributed to the decline, falling 4.7 percent to P10.25, possibly on concern over the adverse impact that high interest rates may have on the country’s largest property group in asset terms, analysts said.

Globe Telecom fell three percent to P815 on continued profit taking. Petron lost 1.1 percent to end at P4.45 on concern over its 2005 earnings results, which have yet to be released.

Philippine Long Distance Telephone Co. recovered after a weak showing for most of the session as bargain hunters stepped in, rising 0.3 percent to P1,830.

ATR Kim Eng Securities research head Edgar Bancod said the broad selloff didn’t appear confined to the domestic market, as the specter of higher interest rates has prompted selling in equities markets overseas.

"It’s happening worldwide. There seems to be some programmed selling going on," said Bancod.

Traders said Wednesday’s retreat may also be due to the continued selling by government financial institutions, with recent market gains partly fueled by purchases made by state pension funds, which have now decided to sell.

"The market rebounded a bit today helped in part by bargain hunting," said Erick Tan, who helps manage about $4 billion at BPI Asset Management Inc. in Manila. "Some stocks have gone down sharply and are trading at attractive levels." Ayala Land tumbled 6.8 percent in two days.

"I don’t see inflation abating until the second half of the year," Tan said. The composite index will probably trade between 2050 to 2150 until end-June, he said.

Ayala Land, the nation’s largest property developer, rose 25 centavos, or 2.4 percent, to P10.50.

Metrobank, the nation’s largest bank by assets, gained P2.50, or seven percent, to 38, its biggest jump since Jan. 20, 2005. The stock jumped P2 right before trading closed at noon.

"Metrobank, for the longest time, has been pushed by some analysts as an attractive stock to own and some people thought that today might just be a good time to come in," Tan said.

Bank of the Philippine Islands gained P1, or 1.7 percent, to P60, its highest since Nov. 22. Pilipino Telephone Corp., the nation’s third-largest mobile-phone company, added 10 centavos, or 3.2 percent, to P3.20, its first gain in five days. – AP