PSEi slides to 7,200 on US election, Fed jitters

The local stock barometer slid to the 7,200 mark on Wednesday, hitting its lowest level in six months, as global investors shunned equities ahead of the US Federal Reserve’s interest policy pronouncement alongside escalating jitters over the hotly-contested US presidential elections.

Declining for the 8th straight session, the Philippine Stock Exchange index lost 152.40 points or 2.06 percent to close at 7,252.40. By percentage decline, the PSEi was the most battered among Asian stock barometers.

The closing level on Wednesday marked the PSEi’s lowest level since May 10, the day after the Philippines conducted its presidential elections.

All counters were in the red but the most battered was the financial counter which tumbled by 3.24 percent. The industrial, holding firm, services and property counters slipped by over 1 percent.

Foreign investors were net sellers at the local stock market, resulting in around P1.47 billion net foreign outflows for the day.

BPI Securities president Michaelangelo Oyson said investors were on a “risk-off” mode amid uncertainties on the US elections and lack of fresh local corporate news. However, he noted that “interesting valuations (were) emerging.”

Overnight, the Dow Jones Industrial Index fell by 105.32 points or 0.58 percent on a mix of US Fed and election jitters, setting a bearish tone across Asian markets. Hong Kong’s Hang Seng index shed 336.57 points or 1.45 percent while Japan’s Nikkei 225 shed 307.72 points or 1.76 percent. Taiwan’s main index fell by 133.66 points or 1.44 percent.

“Markets are grappling with several sources of uncertainty. US equities weakened overnight as the presidential election odds tightened further. This has muddied the outlook for the Fed (US Federal Reserve). The consensus likely had anticipated that tonight (Nov. 2) the FOMC (Federal Open Market Committee) will signal a December hike by adding language to the statement regarding raising rates ‘at the next meeting,” Citigroup said in a research note on Wednesday.

But rising political uncertainty may keep the Fed from sending such a clear message, Citi said.

“While a (Donald) Trump victory is still not our base case, markets are likely to have further downside risk into the election. One reason is that it is in both parties interest to claim that the race is tight in order to mobilize voters. Another is that it may take until shortly before the election until polls reflect latest developments. The perceived risks from the election are thus likely to remain high into the event,” it said.

Previously, the financial markets priced in a prospective victory by Democratic candidate Hillary Clinton but recent news about Clinton and Trump on a neck-and-neck battle unnerved investors.

At the local market, value turnover for the day amounted to P7.89 billion. There were 137 decliners that overwhelmed 46 advancers while 49 stocks were unchanged.

Metrobank, the day’s most actively traded stock, fell by 5.04 percent. The bank announced last week a 4.9-percent drop in nine-month net profit.

Security Bank also fell by 6.9 percent. It reported on Wednesday a 9-percent increase in nine-month net profit to P6.6 billion.

URC, MPI, JG Summit, RLC and DMCI all declined by over 3 percent while BDO, SM Prime, Megaworld, BPI, AEV, Globe and AP all fell by over 1 percent.

PLDT slipped by over 1 percent while ALI, AC, SMIC and Jollibee also modestly contributed to the day’s PSEi decline.

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