MARKET CONTINUES TO DROP AS HIGH OIL PRICES DAMPEN SENTIMENT
MANILA, August 17, 2005 (STAR) Share prices closed 0.62 percent lower yesterday as investors sold shares in blue chips due to concerns that higher oil prices could weaken consumer demand and hurt profits, dealers said.
They said there were also concerns that the government may not fully implement a crucial expanded value-added tax (VAT) even if the tax, which has been suspended by the Supreme Court, should be finally upheld.
The composite index slipped 12.41 points to 1,993.58 after trading between 1,986.57 and 2,005.99. Volume amounted to 375.05 million shares worth P931.6 million.
The broader all-shares index retreated 5.07 points to 1,209.91.
Decliners beat risers 47 to 27, while 51 stocks ended unchanged.
The Philippine peso traded at an average of 55.809 at the end of stock market trading yesterday.
"The market continues to keep its focus on the effects of higher crude. Investors are now re-evaluating their projections on how the economy and companies are likely to perform, given the current scenario," said Jonathan Ravelas of Banco de Oro.
"An air of negativism has surrounded the market again. Some people are of the opinion that the line between politics and market fundamentals is again blurred," said Mark Alan Canizares of Citiseconline.com.
He was referring to calls that President Arroyo defer the implementation of a crucial expanded value-added tax (VAT) in order to cushion the effect of oil price increases.
The expanded VAT is needed to control the country’s budget deficit but the Supreme Court suspended its implementation on July after the opposition questioned its legality.
Philippine Long Distance Telephone Co. (PLDT) was the most active stock, closing P20 lower at P1,620. Rival Globe Telecom retreated P30 to P780.
Ayala Land gained 10 centavos to P8.30 while parent Ayala Corp ended unchanged at P315. Bank of the Philippine Islands was steady at P51.50.
San Miguel A shares, limited to Filipino investors, ended steady at P69 while San Miguel B shares, available to foreign investors, fell 50 centavos to P99.50.
Analysts said the market was also worried by newspaper reports that President Arroyo may suspend implementation of some provisions of the expanded value-added tax to cushion the impact of higher oil prices.
Leading losers were blue chips Philippine National Bank, PLDT and Ayala Corp.
PNB fell around 15 percent to P40.50 after only two of 10 prospective buyers submitted bids during Friday’s auction of a 67- percent stake in the country’s fourth-largest lender. – AFP, AP
New PriceSmart owner vows continued operations in RP By Marianne V. Go Star 08/17/2005
William S. Go, PriceSmart Philippines (PSMT) chairman and now majority stockholder of the warehouse shopping firm, assured yesterday patrons and members of PriceSmart that his group would work on turning around the beleguered retail outlet group.
In his first press conference after officially taking over management control of PSMT last Aug. 12, Go and his lawyer Ramon C. Esguerra vowed that the warehouse shopping group will continue to operate in the Philippine.
Go and Esguerra disclosed that the new management group is conducting an audit of PSMT’s finances to determine if there is a need to infuse additional capital and how the retail group can be turned around.
Creditor banks of PSMT, Esguerra said, had expressed their continued support for PSMT and the new management group of Go.
Go and his group gained 90 percent control of PSMT following an out-of-court settlement with Price-Smart USA whereby both parties agreed to drop all of their legal filings against each other, both in the US and in the Philippines, and control of PSMT would be completely turned over to Go and E-Class Corp.
The remaining share of 10 percent would continue to be held by First Metro Investment Inc., the investment arm of Metropolitan Bank and Trust Co.
Go and Price-Smart also entered into a one-year agreement for the continued use of the PriceSmart proprietary name, supply chain and system.
After that period, Go and his group can opt to change the name of the retail group.
With its fiscal year ending this month, the group of Go projects PSMT’s losses for 2004 to range from P400 million to P500 million due to illegal disbursements made by the previous American executives of PSMT.
With the takeover, Go and his group will draw up a new financial program and marketing plan for PSMT that will hopefully turn around the retail group.
Part of the turnaround plans include reworking the product mix of PSMT to make the warehouse shopping outlet more affordable to its members.
However, PSMT would continue with the membership system which number almost 60,000.
Further down the line, Go said, the group may continue expanding its outlets to Cebu.
Reported by: Sol Jose Vanzi
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