Markets fall as funds unload on US jitters

07/12/2007

The peso and the stock market suffered substantial losses yesterday on a major slide in Wall Street prompting investors to reduce exposure in high-yielding, riskier assets.

The peso fell to 46.21 per dollar at close of trading from 45.95 the previous day while the shares finished down 0.45 percent. The peso fell as far as 46.30 per dollar.

“We are seeing some risk aversion with the yen trading on the strong side. Currencies in Southeast Asia have been trading on the stronger side last couple of days. It’s probably a healthy correction,” a local dealer said.

“We don’t think it’s a reversal of fortune. It might be an opportunity to get into better levels. But we are just watching this. Better to keep light with the uncertainties,” he said.

The dollar stuck a record-low against the euro and hit a one-month low versus the Japanese yen, a day after Standard & Poor’s and Moody’s started to slash ratings on more than $17 billion of mortgage-related debt.

The news sent jitters through global markets, fearing that the US subprime sector was in worse shape than previously thought. The development fueled risk aversion and prompted some investors to unwind their carry trade positions, traders said.

Investors shied away from most blue chips and bought up shares in fuel products retailer Phoenix Petroleum, which surged nearly 43 percent on its first day of trading.

The composite index lost 16.74 points to 3,704.22, off the day’s low of 3,686.98. The all-share index fell 11.98 points to 2,383.05.

Of the 169 stocks that were traded, 66 retreated and 54 advanced, while 49 were unchanged as 5.1 billion shares worth P5.3 billion changed hands. The local currency traded at 46.116 to the dollar.

“Today’s trading was influenced by a big drop on Wall Street overnight, but the market has seen support at the 3,700-point level,” said Rommel Macapagal of Westlink Global Equities.

“We’re now trying to find a strong base after we hit new record highs last week and as we prepare for the next push,” he added.

SM Investments, the second largest Philippine company by market value, fell 12.50 pesos to 427.50.

Globe Telecom, the country’s second largest telecommunications company, retreated 35 pesos to 1,350.

Philippine Long Distance Telephone or PLDT, the biggest company here by market value, was steady at 2,660 pesos.

Phoenix Petroleum ended at 12.75 pesos, off its highest level of 14, but 30.1 percent higher than its initial public offering price of 9.80 pesos.

“A” shares of brewer San Miguel was unchanged at 75 pesos and its “B” shares fell 50 centavos to 82.50 pesos. AFP

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