RP stock market tumble wipes out year’s gains

PHILIPPINE NEWS SERVICE — PHILIPPINE stocks tumbled yesterday, erasing the key index’s gain this year, after reports showed that losses on US home loans were spreading and a housing slump was worsening in the world’s biggest economy.

The main Philippine Stock Exchange Index, which gained 27 percent this year up to its record close on July 5, has slumped 13 percent in the last five sessions, erasing about $11.46 billion from market value.

And the peso continued to weaken against the US dollar as overseas funds sold Philippine stocks, reducing their need to hold the currency. It closed at 46.43 against the greenback against 46.23 on Wednesday.

“The peso is being besieged by the selling on the equities market,” said Wick Veloso, treasurer at HSBC Holdings Plc in Manila.

“Investors are shifting away from emerging markets on concern that the subprime scare isn’t over yet.”

“We’re feeling the impact of fears a credit crunch will come about because of the subprime loan problem in the US,” said Olan Caperina, who helps manage $5 billion of global assets at BPI Asset Management Inc.

“Nobody can say for certain that this is the lowest of the low because every day there are companies coming out affected or having liquidity problems.”

Philippine Long Distance Telephone Co. and Ayala Corp. led the declines that extended the main stock measure’s losing streak to a fifth day, the longest in almost a year.

The Philippine Stock Exchange Index lost 188.03, or 6 percent, to 2,942.31 at the close of trading, a seven month low. Yesterday’s drop was the biggest since a 7.9-percent plunge on Feb. 28, when a sell-off in China shares triggered a global rout in equities.

Philippine Long Distance Telephone Co., the nation’s biggest company by market value, declined P195, or 7.9 percent, to P2,270. Ayala, the fifth-largest Philippine company by market value, dropped P15, or 3.5 percent, to P417.50, its lowest since Dec. 20.

“The market is through with the hoping stage that prices will hold and bounce back, and has now moved to fear and panic,” said Jerome Gonzalez, who helps manage $65 million at Manila-based PhilEquity Management Inc.

“A recovery in sentiment depends a lot on what happens in the US.”

Ayala Land Inc., which makes about 30 percent of its home sales to Filipinos working overseas, declined 50 centavos, or 3.5 percent, to P13.75. Megaworld Corp., the country’s second-largest developer by market value, and which sources 20 percent of its home sales from Filipinos abroad, fell 25 centavos, or 8.1 percent, to P2.85, rounding a 17 percent, five-day slump.

“We are staying on the sidelines,” Caperina said. “You can’t fight this trend. We have increased our position on fixed income assets.”

Bank of the Philippine Islands, the country’s largest lender by market value, and which services one of the largest volumes of money transfers from Filipinos overseas, lost P4.50, or 7.6 percent, to P54.50, extending a five-day, 9.2 percent loss.

SM Prime Holdings Inc., the largest shopping mall operator, fell 50 centavos, or 5 percent, to P9.50, a three-month low.

Shares worth P4.98 billion were traded, 12 percent less than the six-month daily average and the biggest in five days. Losers beat gainers 143 to six, with 13 stocks unchanged in the broader market.

Meanwhile, Chinatrust Philippines treasurer Roland Avante said the market would test new lows for the peso, although the long payroll weekend could help it recover.

“The fundamental view of the market is that there is risk aversion,” he said.

“But at a certain point, there could be some divergence. We could be affected by the US subprime, but we have to ask ourselves if it is really that bad.”