Philippine shares lower in cautious trade ahead of Fed meeting

Philippine shares lower in cautious trade ahead of Fed meeting - UPDATE

	Published : Tue, 11 Dec 2007 04:04 By : Agencies Print this Story

MANILA (Thomson Financial) - Philippine shares were lower halfway through Tuesday's trading as investors took a cautious

stance ahead of the Federal Reserve's decision on interest rates.

Although Wall Street was upbeat on Monday amid expectations of a further reduction in interest rates, economists were still split on whether it will be a quarter-point cut or a half-point cut. Analysts say investors are unlikely to cheer a 25 basis point cut which many believe has already been priced into share prices after last week's rally.

The Fed meets Tuesday to decide what to do with interest rates.

'A rate cut is a given but investors are unsure about its size,' said Lawrence de Leon, an analyst at Accord Capital Equities.

Foreign funds were also cutting their positions in local stocks ahead of the widely expected rate cut in the US, said Ron Rodrigo, research head at DBP Daiwa Securities.

'Foreign investors are cashing out on emerging markets and transferring funds to the US,' Rodrigo said.

At 10.46 am (0246 GMT), the composite index was down 18.47 points or 0.5 percent at 3,657.05.

The broader all-share index fell 7.51 points or 0.3 percent to 2,235.34.

News that Philippine exports rose 10.5 percent in October from a year earlier, the first double-digit growth rate in nine months, failed to stir excitement.

'Maybe what investors want to see is a sustained double-digit growth in exports,' Accord

Capital's de Leon said.

For the first 10 months, exports rose 5.4 percent to 41.849 billion dollars, still below the

government's new full-year growth forecast of 8 percent. The government had previously projected exports growth of 11 percent for 2007.

'It's a bit of a surprise but it's very encouraging considering that Philippine exports growth have been softening for sometime now,' said Frederic Neumann, an economist at HSBC in Hong Kong.

'It suggests that the peso appreciation over the past year has not impaired the competitiveness of Philippine exports too much,' he said.

Market leader Philippine Long Distance Telephone Co fell 10 pesos or 0.3 percent to 3,025 pesos, extending losses for a third day after recent gains.

Bank of the Philippine Islands retreated 2 pesos or 3.1 percent to 63 pesos after a recent rally.

Philippine National Bank (PNB) was down 1.50 pesos or 2.9 percent at 50.50 pesos, giving up some of its recent gains from speculation that it will soon merge with Allied Banking Corp.

Late Monday, PNB said it has not yet reached a final decision to merge with Allied Bank despite a Supreme Court decision last week nullifying a government sequestration order on some of the assets of tycoon Lucio Tan, the controlling shareholder of both PNB and Allied Bank.

(1 US dollar = 41.52 pesos)

enrico.delacruz@thomson.com

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Philippine shares lower in cautious trade ahead of Fed meeting - UPDATE