Philippine stocks near bear market territory

MANILA, Philippines—Local stocks slumped further Monday on escalating risk aversion arising from the worsening problems in the United States and Europe, dragging the Philippine equities market almost back to the bear territory.

The main-share Philippine Stock Exchange index gave up 164.74 points, or 4.24 percent, to finish at 3,721.22.

The index has now fallen 18.2 percent, or 828.78 points, since its peak of 4,550 in August. If the decline widens to 20 percent, it means that the market has fallen back to the regime of the bears and is no longer just undergoing a correction. Many overseas markets entered bear territory last week.

All counters posted steep losses but the mining/oil counter took the worst beating, declining 8.22 percent.

Dealers said the market was not done yet with the massive selling seen last week. They said bargain hunters were not too eager to load up as prices were still falling sharply.

The market was bludgeoned by P860 million in net foreign selling for the day.

“Equity prices continued to get a beating as markets in Asia opened a week of trading amid elevated risks as a satisfactory and acceptable solution to the Greece crisis remained elusive. Marginal rises in Europe and the US on Friday were largely ignored, overshadowed by worst-weekly drops in bourses worldwide,” said Justino Calaycay Jr., a dealer at local stock brokerage Accord Capital Equities Corp.

Bucking the region-wide trend at the open, the PSEi jumped 14.4 points through the 15th minute, touching 3,900, Calaycay noted. “However, lacking sufficient support from the fundamental side, the tepid rally caved in to the negative pressure so that another 15 minutes later, at the turn of the hour, the index joined its Asian peers in the negative.”

The PSEi, which has been rising in the past two years, was now 11.4 percent behind its end-2010 finish.

Value turnover at the local market amounted to P5.11 billion. There were about seven decliners for every single advancer.

The PSEi was weighed down most by PLDT, Metrobank, BDO, ICTSI, AGI, EDC, SM Prime, SMC, Ayala Corp., ALI, Philex, SM Investments, Aboitiz Power, DMCI, BPI and AEV. Further selling also hit Lepanto and RCBC.

Among the few stocks that defied the day’s decline was URC.

“Downside risks remain without concrete improvement in the (EU) debt situation,” said investment bank Credit Agricole CIB. It noted that G-20 countries have been putting pressure on Europe to deliver a credible answer to the sovereign crisis.

Originally posted at 03:59 pm | Monday, September 26, 2011