Stocks tumble on overseas concerns

Local stocks tumbled sharply Monday as a string of external concerns, including risks of the Obama government shutting down, escalated risk aversion among investors.

Declining for a fifth straight session, the Philippine Stock Exchange index lost another 188.01 points or 2.95 percent to close at 6,191.80.

“This is all because of external concerns. There’s the US government shutdown concern and then news about potential government collapse in Italy,” said AB Capital Securities head of research Jose Vistan. A lower-than-expected manufacturing gauge in China in September also added to investors’ concerns alongside reports of a political crisis in Italy.

The local market’s fall was dramatic in the last few minutes of trade, said Eagle Equities Inc. president Joseph Roxas, adding that everyone was concerned about Washington’s shutdown.

But Roxas personally believed that the reaction was exaggerated, noting that the US government had temporarily shut down operations due to fiscal debates 17 times in the last 20 years. “You have a Congress which does not like the President so in the end they will do that. But if the US economy weakens because of this (budget stalemate), then it means the US Federal Reserve cannot taper (its monetary stimulus),” Roxas said.

The PSEi can find the next support levels at 6,100 and then at 6,000 but Roxas said it was possible that recent lows would be revisited.

Value turnover was heavy at P36.38 billion yesterday, inclusive of about P27 billion in SMC shares crossed by BA Securities.  Some were speculating this might be related to a deal for SMC to sell its remaining 27.1-percent stake in Meralco to JG Summit.

There were about three decliners for every single gainer at the local stock market, tracking lackluster regional markets.

The day’s biggest laggers were SM Prime, Semirara, Metrobank and AGI, which all slid by more than 6 percent, while GTCAP and ALI lost more than 5 percent. Doris C. Dumlao