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MANILA - (UPDATED 3:55 p.m.) Philippine share prices fell sharply on Monday to close below the 5,200 level ahead of the State-of-the-Nation Address of President Benigno Aquino III, as more Spanish regions seek financial assistance.
At the Philippine Stock Exchange, the composite index lost 71.49 points or 1.37 percent to close at 5,139.40.
Leading the market's decline was the financials sub-index, which shed 1.81 percent. Only the mining and oil subsector managed to escape the sell-off with a gain of 0.38 percent.
Decliners beat advancers, 107 to 43, while 42 stocks were unchanged. A total of 962.71 million stocks worth P4.09 billion changed hands.
Actively traded stocks were Ayala Land, Ayala Corp., SM Investments, PLDT and Metrobank.
Top gainers were Prime Media, Manchester International and Abacus Consolidated, while the biggest losers were Chemical Industries, Unioil and Asiabest Group.
“The renewed scare because of the troubles in Europe that may aggravate the problems in the United States somehow affected investor sentiment deeply," said Astro del Castillo, managing director at First Grade Finance Inc.
Europe was again at the forefront of investor worries after two Spanish regions sought bailout from the central government, with media reports showing half a dozen regional governments ready to follow suit.
These concerns prompted yields on Spanish 10-year bonds to hit 7.24 percent on Friday, a level that could require Spain to ask for more financial assistance.
Also on Friday, the Dow Jones industrial average dropped 120.79 points or 0.93 percent, to 12,822.57.
'Market hungry for something new'
"Investors generally stood at the sidelines, leaving the market in the hands of the bears ahead of President Aquino’s 3rd State-of-the-Nation Address," said Jun Calaycay of Accord Capital Equities Corp.
Calaycay said the last time the index fell by at least 1 percent on the day of a SONA was in 2004, then President Gloria Macapagal- Arroyo's first as an elected chief executive after winning a tightly contested poll against actor-turned-politician Fernando Poe, Jr.
"Over the last 20 years, average declines on a SONA day reaches only 0.78 percent, putting today’s half-session drop more than twice the average," Calaycay said, referring to the morning session's drop of 1.64 percent for the PSEi.
The analyst said early indications pointed to the President drawing attention to the country’s economic achievements highlighted by a 6.4 percent economic growth in the first quarter and Chief Justice Renato Corona’s conviction on impeachment charges.
“However, more important than the litany of things the administration has done with respect to its campaign pledges, and falling under the blanket ‘matuwid na daan’ advocacy, is an enumeration of the administration’s forward agenda – political (2013 elections), economic (fiscal administration, taxation, job generation), and social (peace and order, housing), particularly those that would require legislative action," Calaycay added.
"The market is hungry for something new. Unless it's something new then it's just a regular occurrence to us," said del Castillo.
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