Local share prices dive as Fed signals slow recovery

The Philippine Stock Exchange index tumbled in thin trade on Thursday, tracking the fall in US and most Asian stock markets after the US Federal Reserve signaled that the economic recovery would be slow. The composite index lost 1.15 percent or 35.16 points to 3,034.13, still above the 3,000 psychological level. Brokerage 2TradeAsia advised investors to include "defensive bets" — companies whose prospects for demand are guaranteed, or those with a rising potential — in their portfolio. These include financial and property, as well as water, energy and food companies. It noted that an index rise primed by the financial and property sectors indicate a recovering market. "These sectors dictate expectations over improved lending and construction prospects in an economy, which should fuel improved business investments in the process," it pointed out. The brokerage said property stocks might soon get noticed, especially with aggressive capital expenditure plans that will be bankrolled by industry leaders such as Ayala Land, Inc. "Investments in property offer alternatives to inflation-hedge instruments, as values rise over time. For the coming months prior to the conduct of general elections within the local setting, it is important to consider including defensive bets within the portfolio structure," it said. "Commodity-related shares may also be looked at, especially since global economic growth will be coming from a relatively weaker base in 2009. Continue to adopt a modest trading strategy as volatilities within the global macro setting are likely to persist," it added. On Thursday, losers beat gainers 60 to 45, while 61 stocks were unchanged. Trading was anemic with 1.54 billion stocks worth P2.6 billion changing hands. Five of the six subindices declined led by industrial shares, which slid by 1.94 percent or 89.95 points to 4,538.74. Financial stocks also went down by 1.22 percent or 7.86 points to 636.65, while property companies were down by 0.79 percent or 8.27 points to finish at 1,041.27. Services likewise slipped by 0.73 percent or 11.31 points to 1,540.67, while holding firms lost 0.56 percent or 9.8 points to 1,736.61. Mining and oil stocks bucked the trend, gaining 0.89 percent or 84.8 points to 9,640.71. Dominant carrier Philippine Long Distance Telephone Co., which earlier this week announced expectations of flat profit growth this year, lost P30 to P2,655, while conglomerate Ayala Corp. went down by P2.50 to P292.50. Metro Pacific Investments Corp., whose profits more than quadrupled to P2.3 billion last year, slightly inched up to P3. Aboitiz Power Corp. which announced financial results on Thursday, was unchanged at P11. Metropolitan Bank and Trust Co. was also steady at P43.50. — N.P. Aquino, GMANews.TV