MANILA MARCH 15, 2007 (STAR) Share prices plunged yesterday under the weight of crashing global stocks.

The composite index lost 107.68 points or 3.38 percent to close at 3,074.28, giving up most of the gains it made in the three previous sessions. It traded between 3,063.81 and 3,181.96.

The broader all-share index fell 60 points to 1,985.77. There were 110 decliners and 14 advancers, with 27 stocks unchanged.

Turnover was 5.2 billion shares worth P4.3 billion.

"Stocks tumbled in knee-jerk reaction to the slump on Wall Street but our losses (yesterday) were not in the same magnitude as the recent sell-off following the sharp correction in China," said Gomer Tan of Regina Capital Development Corp.

The composite index dived 263.84 points or nearly eight percent on Feb. 28 when the rest of the world took their cue from the sell-down in China and Wall Street sparked by worries about the US and Chinese economies.

"This somehow shows the resilience of the Philippine market and we view this downturn as an opportunity for investors to take another look at fundamentally sound stocks," Tan added.

Jitters on Wall Street, where stocks tumbled Tuesday due to financial troubles at sub-prime mortgage lenders, spilled over onto Asian markets, dealers said.

Weak US retail sales figures added to the negative tone in US stocks as investors fretted that problems in the housing market could spread to the broader economy by dampening consumer spending, a key driver of growth.

The US Commerce Department said sales at retailers rose a less-than-expected 0.1 percent in February, suggesting consumer spending might be waning.

The latest downturn followed the turmoil on global equity markets earlier this month sparked by heavy losses in Chinese stocks and raised concerns that that correction still has further to go overall.

The Dow Jones Industrial Average shed more than 240 points Tuesday in its second-biggest drop in almost four years on news that lenders New Century Financial Corp., Accredited Home Lenders Holding Co. and General Motors Acceptance Corp.’s residential unit were facing financial problems on their sub-prime mortgage business.

Top-traded Philippine Long Distance Telephone fell P65 to P2,335.

SM Investments retreated P15 to P360 as investors largely ignored the company’s 32 percent net profit gain in 2006. Ayala Land Inc. was down 75 centavos to P15.75.

San Miguel A fell 50 centavos to P61.50 while its B shares shed 50 centavos to P69.50.

Stocks in Japan, Hong Kong and Australia all fell more than 2 percent, while shares in Singapore, India, and Malaysia tumbled at least 3 percent.

At the Tokyo Stock Exchange, the region’s biggest bourse, the benchmark Nikkei 225 index sank 501.95 points, or 2.92 percent, to finish at 16,676.89 points. Foreign investors who bought up stocks during the market’s recent recovery led the selling, traders said.

Hong Kong’s Hang Seng index was down 2.8 percent, while Indian stocks dropped 3 percent.

In India, jittery investors sold off almost every blue chip stock, dragging the 30-share Sensitive Index, or Sensex.

Indian shares have seen wild swings each time the global markets have turned weak.

Elsewhere, Sydney’s S&P/ASX 200 fell 2.1 percent, Singapore’s Straits Times benchmark was down 3.17 percent, and South Korea’s Kospi closed 2 percent lower.

"The US sub-prime concern has cast a great shadow on Asia. The worry is that it could spill over and cause the US economy to slow down, and this will cause a domino effect on the world economy," said Lee Cheng Hooi, technical analysis manager at EON Capital in Kuala Lumpur. "There could be more bloodbath to come."

Still, other analysts maintained that Asia’s economic fundamentals remain strong and that the recent round of declines in stock prices was more likely a correction to cool markets that had risen too far too fast over recent months.

"The sell-off is in sympathy with the sharp sell-off we saw overnight on Wall Street, and it highlights the continued nervousness out there," said David Cohen, chief of Asian economic forecasting at Action Economics in Singapore.

"In perspective you could still say that this is a correction after the strong rally that was experienced for the previous several months around the world," he said.

While the US retail sales data and mortgage news that prompted the sell-off on Wall Street "are a little concerning," fundamentals such as strong US jobs data released Friday were still supportive of global equities.

"The world economy seems to be remaining on an upward trajectory," Cohen said.

The slump reversed a modest recovery in global markets from even bigger losses that started late last month with a sharp sell-off in Chinese stocks Feb. 27, which contributed to a 416-point drop in the Dow later that day. The Shanghai Composite index was down 1.28 percent yesterday. - AFP, AP

Chief News Editor: Sol Jose Vanzi

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