Peso, stocks dip on inflation fears

05/22/2008

The peso closed at its lowest since November last year while the stock index closed 0.8 percent lower yesterday due to renewed fears of inflation, fuelled by record-high prices of oil, dealers said.

The local currency closed at 43.24 per dollar just off the day’s low of 43.25 from the previous day’s 43 finish.

The downturn at the stock market was, however, muted with thin volumes suggesting that investors were not yet in a panic mode and many were just sitting on the sidelines. The composite index fell 23.70 points to 2,872.45 points off the day’s low of 2,859.38. The all-share index was down 12.17 points or 0.7 percent at 1,770.37. There were 64 decliners and 27 advancers, while 64 were unchanged. Turnover shrank to P1.7 billion from Tuesday’s P2.7 billion.

“The market is just taking a breather after its recent rally from oversold levels. The problem about inflation is turning uglier but there hasn’t been panic selling,” said Gomer Tan of Regina Capital Development Corp.

“Skyrocketing oil prices renewed inflationary concerns. The fundamentals point to even higher oil prices, and making matters worse is the speculative element as funds are now flowing into commodities,” said Jose Vistan of AB Capital Securities.

A weakening peso was also a drag on investor sentiment, said Francisco Liboro of PCCI Securities, as importers led by oil companies scramble for dollars to pay for still rising crude prices.

“Investors are waiting for the bubble to burst in oil prices. Prices will go up further before rapturing — when markets realize there is enough supply and speculators driving up prices will have nowhere to go but to take profits,” Liboro said.

“But for now, any new record price will trigger selling of stocks,” he added.

Philippine Long Distance Telephone Co., the country’s biggest company by market value, fell 0.9 percent to P2,655, tracking overnight losses in its American Depositary Receipts.

But Philex Mining, the country’s biggest producer of gold and copper, bucked the trend as commodities rallied. Philex rose 2.8 percent to P7.40.

Food and drinks giant San Miguel Corp.’s A-shares, which only Filipinos can trade, lost 1.1 percent to P43.50. Its B-shares, open to foreigners, slipped 2.2 percent to P45. AFP

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