BSP  SEES  INFLATION  TRENDING  LOWER  /  RP STOCKS PLUNGE IN GLOBAL SELL-OFF

MANILA, JULY 28, 2007
(STAR) By Iris C. Gonzales - The Bangko Sentral ng Pilipinas (BSP) expects inflation to continue its downtrend this year but noted that the country remains susceptible to higher oil prices.

The possibility of bad weather which could impact on farm output and the possibility of additional wage adjustments could, however, pose threats to the inflation outlook, BSP Deputy Governor Diwa Guinigundo told a press briefing yesterday on the inflation report for 2007.

He also said that the sustained growth of the global economy and the increase in investments could drive prices up.

Nevertheless, the BSP expects the inflation rate to hit 2.6 to 3.1 percent this year, lower than the government’s four- to five-percent target for this year.

The country’s inflation rate hit 2.3 percent in June from 2.4 percent in May.

For 2008, the BSP expects inflation to rise steadily until the second quarter mainly on account of increasing oil prices and possible wage adjustments, Guinigundo said.

Monetary authorities, however, expect inflation to slow down in the last two quarters of next year but noted that risks remain.

“The risks to inflation remain on the upside because of oil prices, weather and possibility of adjustments in wages and transport fares,” Guinigundo said.

Inflation has been very, very benign and lower than the target,” he added.

The BSP executive also reported that domestic liquidity growth decelerated but remained strong.

“Robust dollar inflows from remittances, exports and investments sustained the increase in net foreign assets. Bank lending may have reached a respectable growth given the continued broadening of financial markets, which made non-bank sources of financing increasingly available to the private sector,” Guinigundo said.

He said the BSP will continue to be closely attentive to emerging risks to the inflation outlook, with a view to ensure that its monetary policy stance remains consistent with price and growth objectives.

RP stocks plunge in global sell-off By Zinnia De La Peña Saturday, July 28, 2007

(STAR) Stocks plunged yesterday as credit and housing concerns in the US triggered a global sell-off that pushed local shares to their weakest close in nearly two months.

The unsettling US housing market data spawned worries that the world’s biggest economy is slowing down. The US is the region’s top export market.

Compounding the local investors’ headache yesterday was a technical glitch at the bourse, which delayed the start of trading. Trading started late at 10:10 a.m., prompting the exchange to extend trading hours to 1 p.m.

The main composite index plunged by 140.92 points or 3.8 percent to 3,518.76, its lowest finish since June 7, when it settled at 3,528.79. The index posted a drop of 5.8 percent from the previous week.

It was the third biggest point loss of the local bourse on a single day this year, according to Philippine Stock Exchange president and chief executive officer Francis Ed Lim.

The local market’s biggest single-day point loss this year was posted on Feb. 28 – at 263.84 points.

“I would like to emphasize, however, that – like what happened last February – our market just tracked a regional retreat in stocks, which followed this time the fall in prices at the New York Stock Exchange,” Lim said.

Out of 173 stocks traded yesterday, 141 declined, eight advanced, and 24 were unchanged. A total of 5.4 billion shares worth P6.6 billion changed hands.

“The market followed the sell-down in major overseas markets. The decline on Wall Street is a signal that the US economy may be slowing down,” said Gomer Tan of Regina Capital Development Corp.

Dealers believe that Wall Street’s slump Thursday could be the beginning of a major correction, which will impact heavily on global bourses.

But Jovis Vistan of AB Capital Securities considered yesterday’s local sell-off healthy and only an “overdue correction” given the record-setting run-up this year.

“The correction will be good for the local market because this early, we are detecting problems in the US, and it is a good time to adjust some of the excesses (in prices) in both global and local markets,” he said.

Vistan noted that the main index has already breached his full-year forecast of 3,500 points in the first half and has touched a series of record highs.

“The market’s (recent) optimism could be considered a bit overdone; even on the fiscal front the government set the bar too high but we are still better off than where we were four years ago. The market will eventually show its resiliency,” he said.

Among the biggest losers were conglomerate Ayala Corp., which slipped P35 or 6.2 percent to P525, and its property unit Ayala Land Inc., which fell 75 centavos or 4.3 percent to P16.50.

Megaworld Corp. fell P0.20 or 4.9 percent to close at P3.85, while SM Prime Holdings Inc., the listed investment holding firm of tycoon Henry Sy, shed 75 centavos or 5.9 percent at P12.

Philippine Long Distance Telephone Co. closed P35 or 1.3 percent lower at P2,625 while Metrobank fell P3.50 or 5.22 percent to end at P63.50.

“Notwithstanding what happened (yesterday) here and abroad, we in the PSE remain confident that our market’s fundamentals remain strong. Inflation remains tame, while government reports about our growth performance, measured in terms of our GNP (gross national product) and GDP (gross domestic product), look optimistic and reassuring to investors,” Lim said.

“Our market’s reaction to the developments abroad, which is a clear indication of our global market links, should serve as an urgent reminder for all of us – whether from within the PSE or the government – to strive further in coming up with measures designed to mitigate adverse repercussions emanating from markets abroad,” he pointed out. With AFP


Chief News Editor: Sol Jose Vanzi

© Copyright, 2007  by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE