Stocks down sharply on growing external uncertainty

Philippine stocks fell sharply Tuesday as investors turned risk averse on uncertainly over the economic direction that the United States would take under President-elect Donald Trump.

The benchmark Philippine Stock Exchange index (PSEi) fell 2.53 percent, or 176 points, to 6,802.72 at Tuesday’s close while the broader All-Shares index was also down 2 percent. That was in contrast with solid gains in Wall Street the night before.

“This is a tale of two countries, the United States and emerging countries like the Philippines,” Jonathan Ravelas, BDO Unibank chief strategist, said in an interview.

He noted that the Philippines and the US, based on Trump’s pronouncements, would pursue increased infrastructure spending, which in turn would spur economic growth.

“There’s that dilemma now for investors: Where will I put my money, in the Philippines or abroad?” Ravelas said.

The current market movement suggested that investors were opting to stay on the sidelines, he noted. More stability would come once policies in the US were more clear-cut and that could happen as Trump moves closer to assuming power by January 2017.

Right now, Ravelas said investors were looking at a “comfortable” level to enter, which was anywhere from 6,500 to 6,800. He said volatility would persist in the coming days.

“The market could still hit 6,000,” he said.

Philippine stocks were broadly lower Tuesday, with only mining and oil bucking the downtrend to gain 0.43 percent.

Volume was also relatively weak. A total of 3.58 billion shares valued at P6.96 billion changed hands. Data from the PSE showed that there were 63 gainers while 131 companies declined and 37 ended unchanged.