Phisix down as investors pocket 6-day gains

BY RUBY ANNE M. RUBIO, BusinessWorld Reporter Stocks ran out of steam and failed to sustain their six-day rally as investors took profits on the first day of the implementation of the two-percentage-point rate hike in the national sales tax rate to 12%. The Philippine Stock Exchange composite index (Phisix) finished marginally lower by 0.09%, or 1.87 points, to 2,143.52. Declining stocks took the limelight away from advancing ones at 62 to 35 while 45 shares clung to their previous close. Oliver Plana, AsiaSec Equities, Inc.’s research head, said investors shrugged off the protest actions against the value-added tax (VAT), which is aimed to achieve a balanced budget. He believes the positive sentiment is intact and that the market will continue its uptrend. "The rallies were not widespread but just pocket resistance," If the government does well in managing the fiscal side and increase revenue performance, I think the ratings upgrade will take care of itself," he added. Jonathan L. Ravelas, Banco de Oro Universal Bank market strategist, said investors either cashed in their gains or lightened up their positions in favor of First Gen. Corp.’s P8.5-billion public offering of 180.91 million primary shares. "Investors took profits upon implementation of the VAT hike," he said, adding that it was as if investors sold on news. "Some took profits and moved to other counters although there was a slight decline. Even the peso was stronger and [so were] the bond prices. The market may be consolidating ahead of the release of the full-year earnings. There is room for further upside although not as fast. We will probably see another attempt for another upside on anticipation of better economic growth," he added. Investors cheered on news that the gross domestic product (GDP) – the value of goods and services produced within the country – rose by 5.1% in 2005 to reach the high-end of the National Economic and Development Authority’s 4.8% to 5.1% growth forecast. "It is surprising the economy still grew at 5.1% particularly at a time of political uncertainties. We continue to believe we will see a 5.5% GDP growth on consumer ... and government spending for infrastructure this year. Hopefully, that will keep the momentum of the economy given we are closer to a balanced budget by 2008, better foreign exchange rate, and stable interest rates will attract foreign investors," said Mr. Ravelas. The property index rose 1.57%, or 13.97 points, to 901.47 as interest rates remain low. Mining and oil ended stronger by 0.85%, or 25 points, to 2,965.65. Services closed higher by 0.39%, or 3.98 points, to 1,031.11. The industrial index gave up almost 1% to close at 3,223.82, down by 32.48 points while holding firms slipped by 0.94%, or 9.89 points, to 1,038.99. The broader all-shares index declined by 0.09 points to 1,308.78. Trading was brisk as volume turnover hit 5.244 billion shares amounting to P1 billion. PhilWeb Corp. shed 10.52% to P0.034 from P0.038 as investors cashed in their gains ahead of the signing of a memorandum this week with ePLDT, Inc. The wholly owned unit of the Philippine Long Distance Telephone Co. (PLDT) will become the owner of 20% of PhilWeb’s expanded capital.