Syria woes drive stocks down

September 4, 2013 | MANILA, PHILIPPINES

THE STOCK MARKET fell yesterday as leaders of the US Congress backed a military strike against Syria, a development which investors fear could disrupt the trading of oil.

The Philippine Stock Exchange index (PSEi) lost 115.58 points or 1.90% to 5,968.33, while the broader all-share index fell 58.35 points or 1.57% to 3,663.80.

“Escalating external risks in Syria slid the PSEi below 6,000 as [yesterday] also marked the last day of the Chinese ghost month,” said Abbygayle M. Estrella, analyst at AB Capital Securities, Inc.
Lexter L. Azurin, research head at Unicapital Securities, Inc., added:

“The market dropped today on concerns over possible US military action against Syria.”

The rift between the United States and the Middle East nation could push fuel prices, he explained, a pressing concern for an oil importer such as the Philippines.

“When it comes to oil prices, our country is quite vulnerable since most of our oil consumption is imported and thus will affect the domestic economy, particularly on the consumption side,” Mr. Azurin said.

The stock market climbed earlier this week after US President Barack Obama delayed his decision on a military strike against Syria, seeking Congress’ approval instead.

But the market pulled back after Republican House Speaker John Boehner expressed support for the action. House Majority Leader Eric Cantor also pledged his support for action.

Nancy Pelosi, Democratic minority leader in the House of Representatives, said she believes Congress will support a resolution authorizing the use of US military force against Syria.

The US is leading other nations in a campaign against Syria after Bashar al-Assad’s government allegedly used chemical weapons last month to hit a rebel-held stronghold outside the capital of Damascus.

Major Asian stock markets ended mixed yesterday. Japan’s Nikkei added 75.43 points or 0.54% to 14,053.87; Hong Kong’s Hang Seng index dropped 68.36 points or 0.31% to 22,326.22; while the Shanghai Stock Exchange composite index gained 4.51 points or 0.21% to 2,127.62.

All sectoral indices felt the overall weakness of the local bourse yesterday, with holding firms leading the downtrend, plunging 122.73 points or 2.29% to 5,236.08.

Services dropped 35.60 points or 1.84% to 1,894.26; industrial slid 169.41 points or 1.80% to 9,242.10; property declined 35.36 points or 1.53% to 2,276.82; mining and oil went down 149.91 points or 1.10% to 13,521.98; while financials shed 15.99 points or 1.09% to 1,453.74.

The total value of trades fell to ₱6.01 billion yesterday from ₱5.15 billion on Tuesday.

Losers outnumbered gainers, 105-35, while 48 issues were unchanged.

A daily list of the 20 most actively traded stocks showed 18 issues lost, while two gained.

Leading the losers were SM Investments Corp.; Philippine Long Distance Telephone Co.; Ayala Corp.; Ayala Land, Inc.; and GT Capital Holdings, Inc.

Escalating geopolitical tensions abroad could again weigh on the market today, analysts said.

“We continue to monitor developments abroad especially with regards to the measures the US will take against Syria,” Mr. Azurin said.

“This poses a concern to markets not just locally but major markets as well,” he added.

“If the US decides to attack Syria, then global markets may take a hit…”
Ms. Estrella, for her part, said: “For [today], tensions in Syria still poses a negative bias for the PSEi.”

She pegged the market’s immediate support at 5,770 and the resistance at 6,100. — Cliff Harvey C. Venzon


PSE-PDEx merger threatened

September 5, 2013 | MANILA, PHILIPPINES

THE BANKERS Association of the Philippines (BAP) is reviewing a planned merger between the Philippine Stock Exchange (PSE) and Philippine Dealing & Exchange Corp. (PDEx) following the filing of an antimonopoly lawsuit against the latter.

“We are putting the discussion on hold until we sort out the case. We need to discuss if we will continue with the due diligence while the case is pending before the high court,” BAP President Lorenzo V. Tan said in a text message.

The matter will be taken up during a BAP board meeting today, Mr. Tan added, even as he expressed optimism that “a win-win situation on the case” would be found.

The BAP has a 25% stake in Philippine Dealing Systems Holdings Corp. (PDS Group), which is the holding company of PDEx. The PSE is another major shareholder of the PDS Group along with the Singapore Stock Exchange, each owning a 20% stake.

PSE Chairman Jose T. Pardo declined to comment on the issue, saying in a text message: “[I] would rather not comment pending feedback from our lawyers.”

The planned merger of the country’s stock and fixed-income exchanges has been scheduled for Nov. 30. This was put in doubt after a lawsuit was filed on Aug. 22 against PDEx, PDS Group, Philippine Depository & Trust Corp., Philippine Securities Settlement Corp., Bangko Sentral ng Pilipinas, Securities and Exchange Commission, the Finance Secretary, the National Treasurer, BAP and PDS Group President and CEO Vicente B. Castillo.

The case, filed before the Supreme Court, was pressed by former legislators Aquilino Q. Pimentel, Jr. and Luis R. Villafuerte, Sr., former Budget Secretary Benjamin E. Diokno and former national treasurers Caridad R. Valdehuesa and Norma L. Lasala.

“We are asking … [for] a TRO (temporary restraining order) on PDEx’s activity,” Mr. Diokno yesterday said in a text message.

The petitioners want to shut down the link between PDEx and the BSP’s Philippine Payments Settlement System, which enables banks to both process and settle fund transfers real time, and the Treasury bureau’s Registry of Scripless Security, which is the official registry of absolute ownership, legal or beneficial titles or interest in government securities.

Shutting down the platform does not mean the secondary trading would stop, Mr. Diokno said, Market players raised doubts, noting that not all have access to the Bloomberg terminal alternative. — A. R. R. Gregorio


Inflation slows to 2.1% in August

INFLATION continued to decelerate in August, the National Statistics Office (NSO) reported this morning, due to declines in housing and utility rates.

Prices inched up by 2.1% last month, the lowest since August 2009, pulling down the year-to-date inflation rate to 2.8%.

Inflation came in at 2.5% in July and 3.8% in August the year before.

The latest inflation results open room for more easing by the Bangko Sentral ng Pilipinas, which has set an inflation target of 3-5% for this year.

In a statement, NSO said it had noted a decrease in the housing, water, electricity, gas and other fuels index.

“Contributing also to the downtrend were the slower annual increments in the indices of food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; furnishing, household equipment and routine maintenance of the house; and transport,” it said.