RP stocks plunge more than 1% as oil prices soar

MANILA, Philippines- Local stock prices plunged more than a percent on Thursday as galloping prices of oil gave rise to worries about the gravity of the ongoing slowdowns in world economies. The Philippine Stock Exchange composite index closed lower by 33.87 points or 1.18 percent at 2,838.58 while the all shares index dropped 17.50 points or 0.99 percent to 1,752.87. Oil prices passed $135 per barrel Wednesday night, and looked to be moving towards higher levels. “We’re still in a bear market… high oil prices are creating problems for the airline industry and firms dependent on consumer sales," AB Capital Securities chief researcher Jose Vistan said. Firms like mall operator SM Prime Holdings, and Jollibee, the largest fast food chain in the country, will take the increase in oil prices and the expected downturn in the economy the hardest, Vistan said. In Thursday’s trade, SM Prime fell P0.20 or 2.50 percent to P7.80. Jollibee, however, was flat at P44.50. Vistan said oil prices, which he expects to continue surging in the medium term, would push inflation to record levels and weaken the spending power of Filipinos, and thus affect the earnings of local companies. “Oil is a sensitive product. It affects all industries because of its transportation and power use. So high oil prices will definitely be inflationary," Vistan said. Power firms like Manila Electric Co. and oil refiners Petron Corp. will also take a hit from the oil price surge because of the highly politicized market in the Philippines, he explained. “Even if we are a free market, the political situation is volatile so they can’t automatically pass on the price increases." Meralco lost P2 or 2.90 percent at P67 on Thursday, while Petron shed P0.10 or 1.69 percent at P5.80. Market heavyweight Philippine Long Distance Telephone Co. slipped P10 or 0.38 percent to P2,645. - Patricia de Leon, GMANews.TV