Bloodbath August 17,2007

Business | Manila Times

Friday, August 17, 2007


July foreign investments in local shares up
Stocks fall sharply due to US credit woes


THE Philippine stock market fell sharply on Thursday, amid a region wide tumble after Wall Street skidded for the fifth straight session on persistent credit market worries, dealers said.

They blamed the US plunge that saw the Dow Jones industrials close Wednesday below the 13,000 mark for the first time since April, despite the Federal Reserve’s move to inject more cash into the banking system.

The Philippine composite index lost 188.03 points or six percent to 2,942.31. This was the biggest single-day drop since February 28 when it sank by 263.84 points, or 7.9 percent to 3,067.45, following a plunge in the Shanghai stock market.

Back then, fears of an economic slowdown in the US hit the Chinese bourse and spread across other Asian markets. The US is China’s biggest export market, allowing the Asian economic giant to enjoy record trade surpluses.

At present, renewed fears of a slowdown in the world’s largest economy brought about by tightening credit markets have roiled markets across the globe.

The Philippines’ all-share index on Thursday fell 105.99 points to 1,901.86. There were 143 decliners and only six advancers, with 13 stocks unchanged.

Volume amounted to 5.5 billion shares worth P4.9 billion.

“People are selling their stocks as if they don’t have value at all. Where it’s going to stop, nobody knows,” DA Market Securities Nestor Aguila said.

“Uncertainty lingers altho­ugh I think we’re now at ground zero and a number of stocks, including some blue chips, are ripe for bargain-hunting,” he added.

“It’s a global situation,” said Allan Araullo, research head of Regina Capital Development Corp., remarking that not even positive corporate figures in the Philippines could overcome this.

“It really depends on the US market. They have to calm down first.”

Araullo said it was a case of “emotion taking over the global market,” remarking that despite the concerns over the subprime mortgages, “the data shows the US economy is still strong.”

Index leader Philippine Long Distance Telephone fell P195 to P2,270.

Metropolitan Bank and Trust—the nation’s biggest lender by assets—shed P3.50 to P49.50. Bank of the Philippine Islands plunged P4.50 to P54.50 and Banco de Oro slid P1 to P54.

Conglomerates were also hit, with Ayala Corp down P15 at P417.50 while SM Investments fell P12.50 to P320.

San Miguel saw its A shares fall by four pesos to P62 while its B shares slid by P3.50 to P65.

The peso also continued to slide on similar concerns over the US’ credit woes.

At the Philippine Dealing System, the local currency weakened by 20 centavos closing at 46.430 against the dollar from 46.230 last Wednesday.

“The stock market [was] hammered, investors are selling their ROP bonds,” Marcelo Ayes, Rizal Commercial Banking Corp. senior vice-president said, referring to Philippine government debt papers.

He said local banks have small exposure in collateral debt obligations (CDO) and mildly affected by the US housing woes but lenders’ net income will be affected more by the drop in the bond market.

Investors are selling their ROP bonds and investing their money in comparable US treasury papers.

The Bangko Sentral ng Pilipinas (BSP) said the domestic capital market is less dependent on foreign denominated financing and there’s sufficient liquidity in the system.

BSP Gov. Amando M. Tetangco Jr. earlier said the impact of the US subprime housing crisis is largely indirect in the form of risk aversion, which is seen in the rise in bond prices and the peso’s fall, similar to what is happening in other emerging markets.

However, the recent weakness of the peso is seen as temporary, as the local currency will be supported by a strong balance of payments (BOP) surplus, the BSP said.

Latest data from the BSP showed that net inflows of foreign portfolio investments reached nearly $1.1 billion last month due mainly to several large initial and follow-on sale of shares in local companies. These stock offerings include those of Aboitiz Power Corp., GMA Holdings, Inc. and Vista Land and Lifescapes, Inc.

State-run Philippine National Oil Co. (PNOC) likewise offered an additional 20 percent of its shareholdings in PNOC-Energy Development Corp.

For the first seven months of the year, newly-registered foreign portfolio investments and capital outflows totaled $9.8 billion and $6.2 billion, respectively, for a net inflow of over $3.6 billion. This net inflow was four times the $894.9 million in the same period last year.
--AFP and Maricel E. Burgonio



Copyright (c) 2001 The Manila Times





Bloodbath in market as US crisis worsens



08/17/2007

The bloodletting intensified at the financial markets yesterday as the stock index fell through the 3,000 mark while the peso dipped to 46.43 from 46.23 the previous day despite suspected Bangko Sentral ng Pilipinas (BSP) intervention.

The peso touched an intra-day low of 46.70 at the floor of the Philippine Dealing System.

Investors moved out of riskier assets amid jitters about the sub-prime lending crisis in the United States, dealers said.

Share prices closed 6.0 percent lower, amid a regionwide tumble after Wall Street skidded for the fifth straight session on persistent credit market worries, dealers said. The composite index lost 188.03 points to 2,942.31.

The index at the Philippine Stock Exchange was down 107.59 points or 3.4 percent at 3,022.75 points less than an hour after trading opened, having closed 4.1 percent down on Wednesday.

Traders said the BSP was seen selling dollars in the market at 46.50 to stem the peso’s decline.

“The dollar-peso (rate) will continue to be influenced by external factors with sub-prime mortgage concerns the driving factor for the greenback’s renewed vigor versus emerging market currencies,” a trader at a local commercial bank said.

“Further routs in the equity market will see more peso weakness ahead.”

Ron Rodrigo of Unicapital Securities said the sharp retreat on Wall Street despite more funds injected into the banking system by the US Federal Reserve reflected deeper investor anxiety. Locally, he said investors are no longer focusing on the economy and corporate earnings.

“The fact that US equities dropped despite the Fed’s move created a dilemma for local investors. It is obvious that investors are looking for clearer signals that the sub-prime and credit crisis can really be contained and prevented from spilling into other economic sectors,” Rodrigo said.

Dealers blamed the US plunge that saw the Dow Jones industrials close Wednesday below the 13,000 mark for the first time since April, despite the Federal Reserve’s move to inject more cash to the banking system.

The all-share index fell 105.99 points to 1,901.86. There were 143 decliners and only six advancers, with 13 stocks unchanged. Volume amounted to 5.5 billion shares worth P4.9 billion.

“People are selling their stocks as if they don’t have value at all. Where it’s going to stop, nobody knows,” DA Market Securities Nestor Aguila said.

“Uncertainty lingers although I think we’re now at ground zero and a number of stocks, including some blue chips, are ripe for bargain-hunting,” he added.

“It’s a global situation,” said Allan Araullo, research head of Regina Capital Development Corp., remarking that not even positive corporate figures in the Philippines could overcome this.

“It really depends on the US market. They have to calm down first.”

Araullo said it was a case of “emotion taking over the global market,” remarking that despite the concerns over the sub-prime mortgages, “the data show the US economy is still strong.”

Index leader Philippine Long Distance Telephone fell P195 to 2,270. Metropolitan Bank and Trust — the nation’s biggest lender by assets — shed P3.50 to P49.50. Bank of the Philippine Islands plunged P4.50 to P54.50 and Banco de Oro slid one to P54. Conglomerates were also hit, with Ayala Corp. down 15 at P417.50 while SM Investments fell P12.50 to P320. San Miguel saw its A shares fall by four to P62 while its B shares slid by P3.50 to P65.

Elsewhere, Asian stock markets endured one of their most brutal selloffs in recent years with dramatic falls of more than five percent on some bourses as the fallout from US mortgage woes escalated.

Markets buckled under a wave of selling as the growing fallout from turmoil in US credit markets prompted investors to flee to safe havens such as bonds.

From Tokyo to Sydney, Hong Kong to Mumbai, weary stock dealers’ screens were awash with red again as fears over problems in US sub-prime mortgages to high-risk borrowers continued to buffet stock markets around the world.

Australian home loan group RAMS sparked fresh jitters after it failed to roll over five billion US dollars in debt due to worries over the US credit crunch, which also wreaked havoc on currencies, sending the yen soaring.

In a nerve-wracking day for investors. Seoul reeled from its biggest ever one-day plunge in terms of points, ending down 6.93 percent, but in some markets stocks managed to recover ground in late trade. Tokyo’s Nikkei-225 index fell below the key 16,000-point level for the first time since November before clawing back to end down 1.99 percent.

Hong Kong tumbled 3.3 percent as Singapore dived 3.7 percent. India was down 4.48 percent while Manila closed 6.0 percent lower.



The Daily Tribune © 2006





August 17,2007 Friday - Malaya


REMINISCENT OF 7/11 ROUT: TRADERS
Asian stocks crash; RP leads losers
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By ALBERT CASTRO


Asian stocks crashed deeper yesterday in a rout reminiscent of the September 11, 2001 bloodbath after already jittery investors were further unnerved by the drop in Wall Street.

The Philippine Stock Exchange index lost 6.1 percent, the second highest loss after Jakarta. Singapore dived 5 percent.

Traders were alternately using "bloodbath, crash, meltdown" as panicked investors bolted.

In the Philippines, the sell-down wiped out P150 billion market capital. The two-day rout erased a total of P260 billion.

"It’s horrible. People can’t believe this is happening. A triple-digit fall for two days in a row smacks of a mini crash," said Najeeb Jarhom, research head at Fraser Securities in Singapore.

Investors were falling over themselves in the rush to be ahead of "any more mines that will explode in the world financial market.

Yesterday’s fallout was set off by worries that Countrywide Financial, the largest US mortgage lender, could face bankruptcy if liquidity worsens after a Merrill Lynch analyst flagged that possibility.

"The subprime issue will probably take months to play out so trading is going to be very nervous for a while," said Eric Betts, equities strategist at Nomura Australia.

"Anyone who has a financial interest, like a bank or a fund, may have some unexploded mines waiting to go off, so people are bailing out ahead of time."

Other Southeast Asian markets skidded to multi-month lows as well. Jakarta stocks fell 6.3 percent to a four-month low, Malaysian shares dropped 3.69 percent to a near five-month low.

Philippine stocks plunged 6.01 percent — their biggest one-day drop since Feb. 28 — to a seven-month low, Thai shares lost 3.91 percent, their biggest one-day drop in nearly eight months, and Vietnam’s key index fell 1.65 percent.

Financial and blue chip stocks with large foreign holdings — which have led losses in regional markets in the past three weeks — bore the brunt of Thursday’s sell-off.

In Manila, the Bank of the Philippine Islands, the country’s second-largest lender, dropped 7.6 percent. Philippine Long Distance Telephone Co., the largest telecom, dropped 7.9 percent.

Philippine Stock Exchange index (PSEi) closed at 2,942.31, the level set last December.

The market has been down 19.6 percent since the start of its strong sell-off on July 26.

Analysts said investors are panicking.

Market turnover reached 5.55 billion shares to P4.9 billion.

PhilEquity Fund, Inc. research head Jerome Gonzales said the market is now in a panic stage given the prolonged effect of the US market decline

"We are on a panic stage now. There could be a bounce, but since the concern is brought by the US problem, we don’t know how long the correction will last " said Gonzales.

The PSE said that the top five stocks affected by the sell down were Metrobank, Ayala Corp., Ayala Land, Inc., Bank of the Philipine Island, and Atlas Consolidated Mining Corp.

Metrobank share prices declined 12.9 percent since the July sell-off; Ayala Corp. was down 21.6 percent; ALI was down 16.4 percent; BPI lost 18 percent; and Atlas shed 26.9 percent.

Gonzales however kept a positive outlook on the market’s long term prospects, stressing that the prolonged correction had brought many stocks to a very cheap level.

"At these prices, there are already stocks that have gained value. As a fund, we are looking at a year time frame and there are stocks that are now attractive," he said.

Unicapital Securities, Inc. research head Ron Rodrigo meanwhile shares the optimism of Gonzales recalling the market’s similar experience in 1994.

"Going back to history, it already happened during 1994. The market for the first time reached 3,333.15 at the start of the year and then three months after corrected to 2,503.07 a 24.9 percent drop. It is just a similar scenario, but different factors," said Rodrigo.

Rodrigo noted after that the market was able to recover and post higher before it start its ascend in 1997.

Philippine Long Distance Telephone CO. (PLDT) shed P195 to P2,465.

SM Prime Holdings, Inc. lost P0.50 to P9.50.

Megaworld Corp. shed P0.25 to P2.85.

Ayala Corp. was down P15 to P417.50.

Units ALI was down P0.50 to P13.75, and BPI shed P4.50 to P54.50.

SM Investments Corp. shed P12.50 to P320. (with reports from Reuters)

Metrobank was down P3.50 to P49.50.

Atlas shed P1.25 to P11.50.

Aboitiz Power Corp. lost P0.45 to P3.90.

Benpress Holdings Corp. was down P0.50 to 4.35.

San Miguel Corp. A dhares were down PP4 to P62, B shares were down P3.50 to P65.





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