Manila, July 30, 2003 By Des Ferriols (Star) The peso and local stocks continued to take a pounding yesterday amid increased concerns over political stability following a failed mutiny by junior military officers last Sunday, analysts said.

They said the weekend mutiny by 296 officers and men has clearly unsettled the financial markets and how an investigation is to be conducted into what happened will be crucial for the return of investor confidence, which has been badly dented.

At the Philippine Dealing System (PDS), the peso tumbled by another 29 centavos to close at a fresh four-month low of 54.670 from Monday’s close of 54.380 to the dollar. It hit a low of 54.750 before managing to hit a high of 54.470 to the dollar.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Amando Tetangco Jr. said the weakness of the peso was largely due to the month-end increase in demand, short covering by banks and the general weakness of regional currencies.

Transaction volume was heavy, reaching $171. 5 million, indicating a strong demand from corporate players hedging on the dollar to meet their month-end financing needs.

At the Philippine Stock Exchange (PSE), the 30-Peso, stocks company composite index plunged to its lowest level in four weeks, closing 31.53 points lower at 1,225.23.

Yesterday’s level was the weakest since July 1, when the market finished at 1,221.11.

"Markets are still hurting from the mutiny," said AB Capital economic analyst Jose Vistan.

"It hit the peso and exacerbated losses in the equities market because of companies sensitive to currency depreciation like Meralco and PLDT," he added.

Earlier, BSP Governor Rafael B. Buenaventura said the Makati crisis would have a long-term impact on foreign direct investments.

Investors continue to unload stocks

"Market jitters prevailed after the weekend events and foreigners were seen on the sell side towards the close of session," said Mark Alan Canizares of

"Investors are staying out of the market and waiting for concrete results of the investigation and what will happen next. There are also uncertainties as far as the corporate earnings are concerned," he added.

The military mutineers occupied part of a sprawling shopping mall in the financial district of Makati for over 20 hours on Sunday, demanding the resignation of President Arroyo and other top officials.

The mutineers later surrendered peacefully and the President has ordered an investigation of the incident, including the possible political sponsors of what officials describe as a failed coup attempt.

"There are a lot of questions that remain unanswered, like who is really behind (the mutiny) and if that’s the end of it," said Astro del Castillo, a director of the Association of Securities Analysts of the Philippines.

This uncertainty may continue until it becomes clear who the backers of the mutiny were and how the government intends to deal with the mutineers, he said.

The all-shares index fell 4.55 points to 766.03. Losers outnumbered gainers 59 to 25, with 30 stocks unchanged.

The commercial-industrial index slipped 22.02 points to 1,755 while properties fell 20.85 points to 555.18.

Mining fell 1.53 points to 1,157.73 while oil slipped by 0.01 points to 1.39 and the banking and financial services sector dropped 22.51 points to 431.87 points.

Volume was 724.67 million shares worth P713.2 million from 518.39 million shares valued at P935.47 million on Monday.

Philippine Long Distance Telephone Co. fell P20 to P500 but Globe Telecom bucked the trend to rise by P5 to P655 on hopes upcoming results from the company will be favorable.

Ayala Land Inc. fell 20 centavos to P6.40, while parent company Ayala Corp. dropped 15 centavos to P4.65.

SM Prime Holdings fell 20 centavos to P6 while Bank of the Philippine Islands dropped P4 to P43.50. – With wire reports

Reported by: Sol Jose Vanzi

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