MANILA, June 9, 2005
 (STAR) Share prices closed 2.48 percent lower yesterday in a sharp correction as investors continued to take profits on recent gains amid mounting political concerns, dealers said.

They said uncertainty arising from alleged attempts by the opposition to destabilize President Arroyo’s government saw investors opting for safty after a seven-day rally through to Monday saw the market gain 10.3 percent.

Sentiment has been badly hit, with Arroyo’s popularity rating diving to 26 percent, a near 20-year low, as the Senate conducts public hearings on the alleged involvement of her husband and lawmaker son in an illegal numbers game protection racket.

The military and police leadership have warned of efforts to recruit the armed services to unseat Arroyo amid the allegations.

The Philippine Stock Exchange composite index shed 49.74 points to 1,953.28 after trading between 1,942.60 and 2,003.02. Turnover was 616 million shares worth P1.68 billion ($30.8 million).

The broader all-shares index fell 23.15 points to 1,190.37.

Losers outpaced gainers 79 to 14, with 29 stocks unchanged.

"The decline has accelerated and the market has fallen sharply. There appears to be no sign of a slowdown," said Lawrence de Leon of Accord Capital Equities.

However, some dealers said the correction was healthy as it would allow investors to buy stocks at cheaper prices and so prepare the market for another rally.

"Recent events on the political front have forced investors to lighten up on certain trades and stay on the sidelines," said Jonathan Ravelas of Banco De Oro Universal Bank.

"Hopefully, when the dust settles, investors will start coming back on the basis that improving economic and fiscal fundamentals will remain the same," Ravelas said.

Philippine Long Distance Telephone Co., the most active stock Wednesday, lost P55 to P1,535.

Globe Telecom retreated P35 to P830.

First Philippine Holdings retreated 50 centavos to P49 while Benpres Holdings was down four centavos to P1.14.

San Miguel A, limited to local investors, shed 50 centavos to P58.50 while San Miguel B, available to foreign investors, retreated P2.50 to P90.

"The market staged a huge rally in recent sessions, so now we’re seeing profit taking," said Mark Alan Canizares, investment analyst at "If you look at the market’s long-term trend, however, it’s still up. It’s just natural that at some point them market has to give way to sellers."

Analysts also believe the ongoing political commotion over allegations surrounding Arroyo and her family played a prominent role in the market’s retreat. – AFP, AP

IMF team starts 2-wk review of RP economy The Philippine Star 06/09/2005

A team from the International Monetary Fund will start today a two-week review of the Philippine economy, checking whether the government has implemented policies required by the IMF in exchange for emergency funds.

During a review in November, an IMF team said the Philippines must step up its fiscal reform efforts – improving the growth outlook amid weakening exports, bolstering the banking system and dealing with a large budget deficit – to boost investor confidence.

Since then, the government has passed three tax measures, including revisions to the value-added tax that would increase revenue. The government also posted its first monthly budget surplus in four years in April.

The Philippines has been under an IMF program of one sort or another since 1962. In early 1998, Manila obtained an extension of its program as a shelter from the Asian currency crisis that was still unfolding.

It entered a two-year $1.38-billion standby credit for balance-of-payments support. It forfeited a $300-million loan in October 2000 after failing to meet a government deficit target set as a loan condition.

A seal of good fiscal housekeeping from the IMF is sometimes used as a proxy for a rating from international credit rating agencies, which often determines the cost of the country’s foreign borrowings.

Reported by: Sol Jose Vanzi

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