Philippines share prices closed 1.2 percent lower on Tuesday on profit taking after a drop on Wall Street overnight and negative domestic political news, dealers said. Nagging concerns about the state of the US economy along with local political concerns have all weighed on market sentiment, they said.
The composite index lost 39.69 points to close at 3,283.56, after moving between 3,278.95 and 3,323.25. The broader all-share index fell 18.85 points or 0.9 percent to 1,996.82. There were 71 decliners and 32 advancers, while 50 were unchanged.
A total of 985.7 million shares valued at 2.5 billion pesos (62.5 million dollars) were traded. The peso traded at 40.78 to the dollar. Shortly before trading opened the government announced annual inflation rose to 4.9 percent in January, the highest in 15 months.
"This correction is not unexpected given recent gains. But the element of uncertainty is there and is making investors a bit more cautious," said Rommel Macapaga of Westlink Global Equities.
While investors are keeping a wary eye on Wall Street amid fears of a US recession, Macapagal said domestic political developments also need to be closely monitored. Early Tuesday the House of Representatives voted to oust the speaker Jose de Venecia in a move orchestrated by her two sons who sit in the congress.
Before his ouster de Venecia accused Arroyo's sons of orchestrating his downfall, after his own son implicated the presidential family in irregularities in a 330-million-US dollar telecommunications deal with Chinese state-run firm ZTE Corp.
The deal was subsequently scrapped by the government. "The market is becoming sensitive again to political noise. In previous years, we have seen the market underperform relative to other markets in the region because of political uncertainty," said Jose Vistan at AB Capital Securities.
Philippine Long Distance Telephone Co (PLDT), the country's biggest company by market value, shed 10 pesos to 3,000, tracking the downturn in its American Depository Receipts overnight. Globe Telecom Inc, PLDT's main rival, fell 40 to 1,600, after a five-day rally ahead of the release of its 2007 results. Globe reported after trading hours on Monday a 13 percent increase in net profit to 13.3 billion pesos for the past year as revenue hit a record high.