The local stock barometer has wiped out all gains earlier seen in the year, sliding to the 6,800 level as US policy risk arising from Donald Trump’s election as the new president escalated aversion to most emerging markets.
The Philippine Stock Exchange index (PSEi) shed 103.61 points or 1.49 percent to close at 6,871.48 on Monday as foreign investors trimmed exposure to emerging markets.
The PSEi has now fallen below the 6,952.08 end-2015 closing level. It has likewise slid by 15.3 percent from the stock barometer’s peak level of 8,118.44 seen last July.
Foreign investors were heavy sellers in the local stock market, resulting in net outflows of P1.69 billion for the day.
“Clearly we know little about actual Trump administration policies which will be pursued – this in itself will create uncertainty. From the election campaign, one can surmise that Mr. Trump is not exactly trade-friendly and would like to renegotiate certain security agreements. Increased tariffs toward goods made in EM (emerging markets) would have an impact on liquidity and profits within EM. Neither of these two outcomes are a positive for EM,” Citigroup said in a research note on Monday.
“Until the market has greater clarity, the risk premium for risk assets will remain high. This will hurt EM,” it said.
On Monday, India underperformed other Asian markets as its main index slid by 2.69 percent. The main stock barometers in Indonesia, Hong Kong and Thailand were likewise all down by over 1 percent while stock indices in Malaysia, Singapore, Korea and Taiwan also slipped. On the other hand, China’s main stock barometer rose by 0.45 percent.
“I expect volatility to continue as markets try to decipher potential policies from Trump. Having said that, there is downside risk to the market from foreign funds outflow as investors price in a Federal Reserve rate hike in December and a more aggressive fiscal expansion in the US,” said BPI Securities president Michaelangelo Oyson.
“So far, the results season has provided additional reason to be more excited by the market. While I don’t think the BPO (business process outsourcing ) sector is in the line of fire of Trump’s policies of bringing back jobs back to the US, investors may continue to price in such risk as we have seen in the recent share price movements of ALI, RLC and Megaworld,” he said.
But as the market continued to correct, Oyson said the stock market was close to entering “buy” territory.
At the local stock market, likewise contributing to the PSEi’s decline apart from US policy risk was the sell-off on telecom stocks, with PLDT sliding by 4.2 percent after announcing disappointing third quarter results. This dragged the services counter, which fell by 2.83 percent.
The financial, holding firm and property counters were likewise heavily battered, all declining by over 1 percent.
Value turnover for the day amounted to P7.34 billion. There were nearly three times as many decliners (140) as advancers (48).
Aside from PLDT, investors sold down shares of GTCAP and RLC which all fell by over 4 percent.
ALI, Metrobank, Megaworld and Globe all slumped by over 2 percent while AC, URC, Security Bank, BPI and EDC slipped by over 1 percent.
BDO, SMIC, MPI and AEV also contributed to the day’s decline.
Outside the PSEi, other notable decliners included retailer Puregold, which slipped by 3.25 percent.