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Local stock index falls for 3rd straight day

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pse.com.ph photo

MANILA, Philipines—The US Federal Reserve’s signal to end its aggressive monetary stimulus alongside jitters over China’s economic slowdown continued to drag down local financial markets.

The main-share Philippine Stock Exchange index lost 144.5 points or 2.28 percent to close at 6,182.17, weakening for the third straight session alongside the decline in most markets across the region.

For the week, the index lost 60.09 points or close to 1 percent from last week’s finish of 6,242.26.

All counters were in the red but the mining/oil counter was the most battered for the day, declining by 9.55 percent due to the sharp decline in Semirara (-11.54 percent) and Philex (-11.42 percent). Dealers this reflected the slump in global commodity markets.

Foreign investors continued to pull out funds from the local market, resulting in a net foreign selling of about P2.27 billion for the day. Total net foreign selling amounted to P9.12 billion versus net buying of about P6.85 billion, based on PSE data.

Other big index decliners were RLC (-10.67 percent), AP (-9.94 percent), MWC (-8.84 percent), EDC (-7.63 percent), FGEN (-5.98 percent), Megaworld (-5.93 percent), JG Summit (-4.41 percent) and SM Prime (-3.94 percent).

Value turnover was heavy at P12.97 billion. There were over four decliners for every single gainer at the market.

The market continued to factor in the US Fed’s unwinding of its aggressive bond-buyback activities. After US Fed chair Ben Bernanke’s hint that monetary stimulus would end in 2014, the market is now expecting the Fed to cut back on its monthly bond purchases by September and terminate such activities by June 2014.

Asia has seen an outflow of global funds in the last five weeks. Citigroup estimated that in the week ended June 19, there was net foreign selling worth $3.6 billion in Asia, with Korea and Taiwan taking up the largest stake. But Citigroup estimated that Japan still had a small net buying.


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Tags: economy , Federal Reserve , Philippine Stock Exchange , Stock Activity

  • upupperclassman

    Half of the bubble is bursting. Pray hard that the other half which is the over building of condominiums will not go bust too!!!

  • critique111

    The US QE spillover to Asian emerging market created your hot money investors that resulted to bull run. Without spill over, say taper of 20%, would result to dive in stock market in emerging markets however this is irrelevant as foreign investors are now taking early position at US in order to maximize profit and gain stability whether taper or full withdrawal of QE expected few months ahead and emerging Asian market will dive to realistic PE ratio before stabilizing or lower as incentive to stabilize. Now is time for government to make your government notes, bonds and infamous SDF more unattractive to encourage local business by the billions of pesos to invest directly.

  • LV_cipher

    Over the past three years, when the stock market expanded more than 20% a year while the real economy is expanding only a third of this pace, people are ignoring some clear trouble ahead: i.e., the stock market is in a BUBBLE PHASE and it is at a point that it is most vunerable. No one should be surprised that the bubble is deflating precipitously: as early as mid-2012 some foreign analysts are flagging the situation with the Philippines stock market as “red hot” and attribute its success not in robustness in the economy but rather due to excess liquidity from the quantitative easing of monetary policies in US and Euro-zone. In some previous write-ups by dissenting analysts, it has been highlighted that the local stock market is over-valued considering that the valuation in terms of Price to Earning Ratio (P/E) significantly exceeds regional peers. Any increase in valuation of listed companies did not necessarily correlate to increased earnings (so it begs the question, where is the money going?). Furthermore, the overall market capitalization of all listed companies almost exceeded the GDP, whereas their overall contribution to the GDP of these companies is less than 20%. Overall poverty has also expanded, manufacturing stagnated and export output declined. These were the mismatch and significant disparities which should have clearly signaled to monetary authorities/policy makers (i.e., PSE, SEC, BSP) to issue pronouncements and warnings of the current stock market bubble. Unfortunately, the loud and vicious cheerleaders suppressed any voice from even the most prudent of dissenters. So a lot of people lose money. Realistically, looking at the current P/E ratio of companies, the local index has a lot of room to still deflate to levels which can be considered stable i.e., 3800-4200 pts. Anything higher than 4200 is inflated: remember, you maybe just funding someone’s luxurious lifestyle, expensive vacation or unnecessary purchase/spending. It is prudent now to cash out and leave until the situation stabilize. Play safe and stay out – any increase is temporary and are only a result of speculative trading and volatility. My advice: if you feel sorry about losing money, better trim your losses than feel a lot more sorry for yourself later.

    • go88

      You are right the stock market is not connected with the real economy.
      I could see this bubble happening and sold all the remaining PI stock I had when the PSEI was at 7260 … it will be good to buy again when it falls to the 4200 level, hopefully before christimas time.

  • padrefaura

    pagmaganda ang stocks, sasabihin ng credit administration natin sa sila ang dahilan… papaano naman pag bagsak?

    • bongarroyo

      mali pag maganda sinasabi niyo pasalamatan si gloriang kawatan at pag bagsak naman ay kasalanan ni PNoy. lol

  • dprotector

    The decline in mining shows the Philippines is still a commodity supplier not processor or user. So when the users like China, Japan and US started to process less of these commodities the country is also affected.

    • jason bourne

      New taxes for the mining industry are being considered by the Mining Industry Coordinating Council, an agency created by PNOY. The news of these new taxes may singlehandedly brought down the value of mining stocks today.

      • Prangka

        Tama ka dito. Mining was doing well a year ago until this greedy taxes aim to squeeze more profits from miners.

      • EVILCOUPLE

        Abnoy ang gobyerno like pinoy, pabago bago desisyon, bilyones pinag uusapan dito, This new rules will discourage foreign and local investors to come in in mining industries.

  • Julian de Sota

    ..jobless growth…

  • kilabot

    whatever happened to daang matuwid?
    where are noykapon’s drumbeaters?
    where is the usually voluble pied piper of abnoyance?
    so unnaturally quiet in pinheaded yellowland.

    • engkantosakanto

      pre, mukhang burado na yung ctrl c at v sa keyboard mo. anak ng teteng, wala ka na bang ibang masabi bukod sa template mong yan?

  • spitfire

    Admittedly, I am not an economist but what is happening in the asian stock market viz a viz the Philippine economy can be understood even by a high school student. So, I don’t understand why the Philippine technocrats led by the economist in the palace failed to see the tell tale signs.

    The tell tale sign or omen was glaring and that is: While there was a sudden surge of hot money in the market, in fact billions of dollars, there was a suspicious decline of foreign direct deposits. In other words, they should have been forewarned that that the “bull run” was just a scheme. The billionaires investors chose asian market to manipulate the international stock trading so that investors will rush in and unsuspectingly take the bait and participate with the “fake pie.” Once everything was in place, billions of hot money with it’s huge profit was withdrawn and invested back to the USA thereby helping the dollar increase it’s buying power and effectively boosting the US economy. In short, the rest of the participating speculators are left licking with their loses, impacting a great deal to the asian economy. This is the reason why there is no mark improvement of the people’s predicament. This is why in all my previous postings, every time PNoy flaunts about his economic achievement I always pointed out that this economic-novice leader had no clue that his subordinates were just window dressing. If he had a clue or was aware of the situation then he could not have repeatedly flaunted the Philippine artificial economic bliss. Again,. it’s the economy student.

    • marienkind

      We’ve been through ups and downs over many years. I’ve been trading for a while now but we’ve never experienced this level of higher highs. I’ll give credit where its due. No investor will go beyond the historical highs of the market if they don’t see Pnoy as a potentially good leader. Our story isn’t the same for all countries around us. And to be fair, the weekly chart uptrend that started back in early 2009 is still intact.



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