Index weakens as property stocks drop on rate concerns

Shares fell yesterday, weighed down by property stocks ahead of the Central Bank’s interest rate-setting meeting later in the week.

The 30-company Philippine Stock Exchange Index closed down 17.50 points, or 0.8 percent, at 2,282.89, after advancing 3.2 percent Friday.

"People are awaiting what the Central Bank will do on prospects of further US rate increases and the recent weakness of the peso against the US dollar," said Erwin Balita, analyst at AB Capital Securities.

The bank was scheduled to hold its regular interest rate-setting meeting on Thursday. Despite the recent hikes by the US Federal Reserve and the weakness of the peso, the bank has kept its policy rates unchanged on expectations that inflation will start to ease in the second half of the year.

The government also was scheduled to release first quarter economic growth data on Wednesday. Analysts polled by Dow Jones Newswires projected gross domestic product to have risen between 5.2 percent and 5.5 percent on year in the first quarter.

Leading losers were interest rate-sensitive property developers Ayala Land and Megaworld Corp. Ayala Land fell 1.9 percent to P12.50 while Megaworld declined 1.3 percent to P1.54.

Sectoral indicators ended mixed, with the holding firms and mining subindexes closing higher while the financial, industrial, property and service sectors ended lower.

Philex Mining’s A shares advanced 2.7 percent to P3.85 on the recent recovery of metal prices, while Equitable PCI rose 0.7 percent to P72.50.

"Prices are coming down to more rational levels," said Mark Cañizares, an analyst at Citiseconline.com in Manila. Company earnings "were just within expectations. Valuations were becoming stretched. Investors are waiting for more catalysts,’’ including first-quarter economic growth figures to be released on May 31. "It’s safer if you stay on the sidelines pending the release of the numbers.’’

Metrobank, dropped P1, or 2.7 percent, to P36. Jollibee, the fast-food chain that outsells McDonald’s Corp. in the Philippines, fell P2, or 5.5 percent, to P34.50.

Elsewhere, San Miguel Corp. dropped after announcing it’s in talks with Coca-Cola Co. about the ownership of their bottling venture in the Southeast Asian nation. – AP