Philippine Stock Index Falls, Trimming Best Month Since October

By Ian C. Sayson

July 31 (Bloomberg) -- The Philippine stock index declined, trimming its best month since October, after oil climbed the most in three weeks and the central bank said it may raise interest rates for the third time this year.

Robinsons Land Corp. dropped the most in two weeks, leading builders lower on concern the 3.8 percent gain in oil prices yesterday will fuel inflation and raise borrowing costs, denting demand for homes. Bank of the Philippine Islands fell the most in almost six weeks after reporting lower earnings.

The Philippine Stock Exchange Index fell 6.73, or 0.3 percent, to 2,577.10 at the noon close in Manila. The loss pared the gain this month to 4.8 percent, the most since October. Declines in five of the first six months of this year were driven by concern that soaring oil prices and a U.S. recession will choke consumer spending. This month, oil remains on course for its first monthly retreat in four, by 9.5 percent.

``The gains we have seen this month were primarily driven by the drop in oil and there's no definite indication that oil prices will stay that way,'' said Marvin Yap, who helps manage the equivalent of $6.7 billion at BPI Asset Management Inc. ``Some investors are unwinding their positions because there's nothing certain yet.''

The benchmark index rose as much as 1.2 percent earlier today before Deputy Governor Diwa Guinigundo said the central bank may increase interest rates again if needed.

Oil Surge

Oil, which the Philippines imports, jumped 3.8 percent to $126.77 a barrel on the New York Mercantile Exchange yesterday, the most since July 10. It was at $126.76 in after-hours trading at 2:12 p.m. Philippine time. Oil is set for the biggest monthly drop since September 2006.

Robinsons Land, the nation's third-largest builder and No. 2 shopping mall operator, declined 3.9 percent to 7.40 pesos, snapping a 28 percent, seven-day rally. SM Prime Holdings Inc., which has shopping malls in the Philippines and China, dropped 4 percent, to 7.30 pesos, the most in four weeks.

Bank of the Philippine Islands, the largest local bank by value, declined 2.50 pesos, or 5.8 percent, to 40.50 pesos, the biggest loser by percentage in the benchmark stock index after it reported first-half profit fell 33 percent.

The following shares were among the most active in the Philippine market today. Stock symbols are in brackets after company names.

Telecoms: Philippine Long Distance Telephone Co. (TEL PM), the nation's biggest phone company, added 20 pesos, or 0.8 percent, to 2,500 pesos, its highest since June 6. The company known as PLDT, Globe Telecom Inc. and Digital Telecommunications Philippines Inc. may extend a three-month reduction in text- messaging charges to boost usage, BusinessMirror reported today.

Globe Telecom (GLO PM), the No. 2 mobile phone operator, added 5 pesos, or 0.4 percent, to 1,130 pesos as the volume of trade in its shares increased 66 percent from the six-month daily average. Digital, the smallest among the nation's mobile phone service providers, gained 2 centavos, or 1.5 percent, to 1.40 pesos, its highest this month.

Aboitiz Power Corp. (AP PM), the owner of power plants and distributors, increased 10 centavos, or 1.9 percent, to 5.50 pesos, its highest close since June 17 after winning the bid for the government's 747-megawatt Tiwi-Makban geothermal complex with a $446.9 million offer. The volume of trading in Aboitiz shares was 11 times the six-month daily average.

Vista Land & Lifescapes Inc. (VLL PM), the fifth-biggest local builder, climbed 10 centavos, or 5 percent, to 2.12 pesos, its largest gain since July 4 after the company said it bought 3.09 million of its own shares yesterday, when the stock closed at the lowest since it started trading in June last year.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net