Local shares close 3.0 percent lower on subprime fears

MANILA (AFP) - Philippine share prices closed 3.0 percent lower Friday, amid a slump in global equities on fears a US credit crunch on high risk mortgages posed a threat to the world economy, dealers said.

They said investors became more nervous after BNP Paribas, France's biggest bank, froze withdrawals from three of its funds that had invested in subprime mortgages in the United States.

The composite index ended down 103.24 points at 3,281.96 after trading between 3,385.20 and 3,273.09 points.

The broader all-share index fell 71.88 points to 2,109.70.

There were 136 decliners and only eight gainers, while 15 stocks were unchanged.

Volume traded reached 3.8 billion shares worth 4.7 billion pesos (102.86 million dollars).

The local currency traded at 45.69 to the dollar.

"The precise extent of America's mortgage trouble is difficult to discern. Risk aversion has evidently spilled over into different asset markets from housing-related securities and well beyond the US market itself," said Frederic Neumann, an economist at HSBC.

But he said economic fundamentals across Asia were quite sound and were likely to remain broadly unaffected by the subprime credit problems in the US.

"In the near term, rising risk aversion will impact on the volatile portfolio flows which, in turn, will weigh on the peso and equities," said Frances Cheung, an economist at Standard Chartered Bank.

She observed: "The thing is, investors have been pricing risks too low."

Among the day's biggest losers were index leader Philippine Long Distance Telephone, which was down 65 pesos at 2,555, and SM Investments Corp., which was down 27.50 pesos at 362.50.
Ayala Corp. shed 15 pesos to 465.

San Miguel Corp. saw its A shares remain at 68 pesos while its B shares slipped one peso to 70.