Philippine stocks dipped on Thursday, led by dominant phone group PLDT, on concern over a potential hike in local interest rates if the United States raises its benchmark rates this month.
Philippine Long Distance Telephone Co (PLDT) fell five pesos to 1,065 pesos, tracking the drop in its New York-listed American Depository Receipts of 3.11 percent or $0.61 to $18.99.
PLDT's 45 percent owned mobile phone unit, Pilipino Telephone Corp (Piltel), was unchanged at 1.76 pesos
"PLDT ADR's retreat in New York, coupled with institutional investors' expectations borrowing costs in the US might be raised anytime soon, weighed on sentiment," brokerage 2TradeAsia.com said in a report.
US Federal Reserve Chairman Alan Greenspan said on Tuesday the central bank would do "what is required" to keep inflation in check, spurring speculation that the Fed might raise rates by 50 basis points.
The Philippine central bank has not touched benchmark rates since a cut of 25 basis points in July. The overnight borrowing rate is 6.75 percent and the lending rate is 9.0 percent. The main stock index ended 9.67 points or 0.63 percent lower at 1,533.73 points.
Turnover dropped to 270.38 million pesos ($4.85 million) from Wednesday's 551.64 million pesos. Losers outnumbered gainers 26 to 20 and there were 42 stocks unchanged. Analysts expect the market to remain bearish on Friday ahead of the Independence Day celebration on Saturday, with counting of votes for president and vice president in Congress far from over one month after the May 10 election.
Manila Electric Co (Meralco), the country's largest power distributor, dropped despite news it will raise electricity rates from next month as traders perceived the hike was merely a cost-recovery mechanism.
On Wednesday, Meralco said it was raising power generation charges by four percent to recover extra costs it has paid to power producing firms.
Meralco's B-shares, which are open to foreigners, dropped 1.49 percent or 50 centavos to 33 pesos. Its A-shares, restricted to Filipinos, were unchanged at 19.50 pesos.
First Philippine Holdings Inc, the parent firm of Meralco, was unchanged at 29.50 pesos.
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