PSEi tumbles on day one of ghost month

THE LOCAL stock barometer slid to the 7,800 mark on Wednesday, tracking sluggish regional markets as investors across regional markets tempered UK stimulus hopes while ushering in the so-called “ghost month.”

The main-share Philippine Stock Exchange index lost 149.34 points or 1.86 percent to close at 7,888.44. Apart from the regional downturn, the PSEi was dragged down by further selldown on PLDT and a discounted treasury sale by AEV.

AEV fell by 6.08 percent after selling treasury shares at a discount to market while PLDT, the day’s most actively traded stock, fell by 4.94 percent, as investors braced for lower dividends following the sharp decline in second quarter earnings.

Investors also sold down shares of First Gen (-4.33 percent) and SM Investments (-3.19 percent).

Wednesday (Aug. 3) marked the start of the “ghost month,” a period in the Lunar calendar when Chinese investors avoid making big-ticket investments or other big moves like getting married or moving to a new house. This period also coincides during the season when many investors from the West take long summer breaks, thereby resulting in slower trading volumes. The ghost month will last until Aug. 31.

All counters ended in the red. The decline was led by holding firm and services counters which both tumbled by over 2 percent while the mining/oil and property counters both lost over 1 percent.

Value turnover for the day amounted to P13.55 billion. There were over four decliners for every single gainer at the market.

“Risk assets continued to trade on a weak footing overnight. S&P 500 extended decline and implied volatility index jumped higher. Besides negative spillover from continued sell-off in crude oil, investors seem to be downward adjusting policy easing expectations,” Citigroup said in a research note on Wednesday.

Citigroup said the recently-released details of Japan’s fiscal spending plan were disappointing while risk of disappointment ahead of Bank of England’s monetary policy meeting on Thursday, with markets expecting a mix of rate cut and increase in asset purchases.

“Against this backdrop, downside surprises from US economic data are certainly not helping sentiment either,” the research said.

At the local market, MPI, BDO and JG Summit all slipped by over 2 percent while SM Prime, GTCAP and URC all declined by over 1 percent.

ALI, Metrobank, Megaworld, Globe and AP also slipped.