STOCKS PLUNGE TO WORST 5-MONTH LOW ON DOW FALL, TOURISM FEARS
MANILA, JANUARY 18, 2008 (STAR) Local stocks plunged yesterday to their worst close in five months, pummeled by Wall Street’s extended retreat and worries that tourism may be hit with a US agency’s downgrade of the Philippine aviation safety rating.
The Philippine Stock Exchange Index lost 102.77 points, or 3.1 percent, at 3,248.89 — its lowest finish since Aug. 29.
The latest plunge is the market’s steepest fall since a four-percent drop on Oct. 22, when a deadly blast at a mall in the country’s main business district and declines on Wall Street combined to unsettle investors.
“It was a no-brainer that we would fall again today,” said First Grade Holdings managing director Astro del Castillo, citing Wall Street’s sustained losses Wednesday and a 2.9-percent retreat in Philippine Long Distance Telephone Co.’s American depositary receipts.
Adding to the woes of the stock market was the news that the country’s air safety rating was downgraded by the US Federal Aviation Administration because it failed to meet international standards, said AB Capital Securities research director Jose Vistan.
The move put in jeopardy the expansion plans of Philippine Airlines Inc., the country’s largest carrier, and is expected to hurt the tourism industry, which last year attracted a record three million foreign visitors.
PAL Holdings, which controls Philippine Airlines, fell 1.8 percent to P5.50, weighed down by the ratings downgrade.
Among the hardest-hit Thursday was PLDT, which sank 2.2 percent to P2,920.
Ayala Corp., the country’s largest conglomerate, fell 3.6 percent to P4.70 on worries that its subsidiaries’ earnings may suffer from expectations of slower economic growth.
Mall operator SM Prime Holdings Inc. retreated 7.1 percent to P9.10.
“In a slowing economy, consumer demand is the first to be hit,” said Astro del Castillo.
“We’re still following the trend in the US. But a lot of stocks are now at oversold levels, so I think this selloff widens the window of opportunity for bargain-hunters,” said Nestor Aguila, president of DA Market Securities. But investors should remain cautious, analysts said.
“The spate of bad economic and corporate news is amplifying problems in the US. It only means their problems haven’t been fully played out,” said Jose Vistan Jr, research director of AB Capital Securities.
Philex Mining Corp, the country’s biggest producer of gold and copper, slid 50 centavos or 5 percent to P9.50.
Gold fell $20.60 to settle at $882 an ounce on the New York Mercantile Exchange overnight. Profit-taking and a firmer dollar pulled gold down from Tuesday’s all-time high of $916.10 dollars.
Chief News Editor: Sol Jose Vanzi
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