Philippines shares plunge

Philippines share prices closed 2.42 percent lower on Monday, extending losses in line with a sharply weaker region as sentiment was undercut by a proposed rise in corporate tax and concerns that the US economy has hit a soft patch, dealers said. The Senate wants to raise the corporate income tax by three percentage points to 35 percent in lieu of a two percentage rise in the value added tax (VAT) to 12 percent proposed by the House of Representatives. Congress is to start work Monday on a compromise bill that would be signed into law by President Gloria Arroyo.
The Philippine stock Exchange composite index lost 45.19 points to 1,818.87 after trading between 1,817.01 and 1,894.06 on volume of 703 million shares worth 1.87 billion pesos (34.2 million dollars).
The broader all-shares index fell 37.36 points to 1,121.12. Losers beat gainers 90 to six, with 27 stocks ending unchanged.
"We may have seen huge portfolio inflows in the past months on hopes that the Arroyo government would finally get its fiscal house in order but delays in the reform measures, particularly VAT, have prompted investors to start pulling out their investments," said Ron Rodrigo of Accord Capital Equities.
Foreign investors were net sellers in the market in 19 of the past 23 trading days from March 11, he noted. "We could be in for further declines although there could still be some slight upside along the way," Rodrigo said. He pegged the psychological support for the composite index at 1,725 points. "Investors are worried that companies would be taxed more, instead of raising the VAT, which could have serious repercussions on companies' margins," said Jose Vistan of AB Capital Securities.
Top-traded SM Investments Corp fell four pesos to 244. Philippine Long Distance Telephone lost 30 pesos to 1,335.
Ayala Land was among the few gainers, rising 20 centavos to 7.80 pesos. San Miguel A, limited to local investors, was unchanged at 58 pesos. San Miguel B, available to foreign investors, fell 50 centavos to 82 pesos.