PSEi slips in profit-taking

MANILA, Philippines—The local stock index ended a two-day month-end run-up on Wednesday, as quarter-end window-dressing activities were replaced by profit-taking amid a

Traders work at the Philippine Stock Exchange in Manila. AFP

backdrop of mostly sluggish regional markets.

The main-share Philippine Stock Exchange index gave up 15.01 points or 0.21 percent to close at 7,268.06.

Across the region, trading was muted by a lower-than-expected US confidence index level for September alongside the political unrest in Hong Kong.

The financial, industrial, services, mining/oil and property counters slipped. Only the holding firms managed to eke out marginal gains.

Turnover for the day amounted to P9.14 billion.

There were 56 advancers against 125 decliners while 41 stocks were unchanged.

The PSEi was led lower by Megaworld and GTCAP which both fell by over 2 percent while ALI, BDO, EDC and AC all declined by over 1 percent. PLDT, URC, EMP and BPI also contributed to the day’s decline.

Outside of the PSEi stocks, Nickel Asia and Travellers both declined by over 1 percent.

On the other hand, the PSEi stocks that bucked the day’s downturn were AGI (+2.31 percent) and Globe (+1.66 percent). AP, Petron, SM and Meralco also gained.

“Complacency has taken hold on investors’ sentiment and could keep the risk appetite at high level. But since the Philippine market currently trades at rich valuations (historical versus peer) and viewing its strong performance against the backdrop of higher inflation, monetary tightening and unexciting earnings data, we prefer to be tactically guarded and de-risk equity exposure on market strength,” said a joint publication by First Metro Investments Corp. and University of Asia & the Pacific.

The research note said there could be another round of foreign outflows as the US Federal Reserve lays down its groundwork for interest rate hikes in 2015.

“We may see investors start pricing this in fourth quarter 2014. On this backdrop, we see the US dollar strengthening versus EM (emerging market) currencies (including the Philippines), hurting portfolio gains in the process. At this point, capital inflows may no longer inundate the Philippine equity market,” the research note said.

FMIC-UA&P also said it’s time for a “reality check” to see whether the high price levels were justified. The research note said corporate earnings would be thrust into the limelight and the ability of companies to actually deliver on earnings likely subjected to a lot of scrutiny, especially given the lackluster results in the first half 2014. The note said this could lead to volatile market returns in the interim.

“There will be selective opportunities. We see companies with above-average earnings growth and/or near-term re- rating catalyst, in particular, to come out as outperformers in this investment backdrop,” it said.