Local Stocks end lower on fears caused by Trump’s travel restrictions

The local stock barometer tumbled on Tuesday, sliding below the 7,300 mark, as regional markets were spooked by newly inaugurated US president Trump’s policy moves.

The main-share Philippine Stock Exchange index (PSEi) slid by 107.05 points or 1.46 percent to close at 7,229.66.

All counters ended in the red, especially the financial, industrial, holding firms and services counters, which all fell by more than 1 percent.

Total value turnover for the day amounted to P5.28 billion. There were nearly twice as many decliners (126) as advancers (66).

The PSEi was led lower by Globe Telecom, which slid by 4.12 percent, while Aboitiz Power and GT Capital both lost more than 2 percent.

Ayala Corp., BPI and PLDT all declined by more than 2 percent while BDO, SM Prime, URC, SM Investments and Jollibee slipped by over 1 percent. Ayala Land, ICTSI, Security Bank and Megaworld likewise contributed to the decline.

Metro Pacific bucked the downturn with its 2.56-percent gain.

Elsewhere in the region, stock markets were mostly battered by Trump’s order to restrict travel to the United States. This was seen as a signal that Trump would carry out most isolationist and protectionist measures mentioned during his campaign that, in turn, were seen bad for emerging markets.

“Markets stay focused on the new fiscal and trade policy picture from the Trump administration and the Republican Congress,” investment house BofA Merrill Lynch said.

Local stockbrokerage Papa Securities said the local stock market was currently in a “low-dispersion” environment, a period during which it was seen hard to outperform the index.

“We seem to have moved to a low-dispersion era where it would be hard for funds to outperform, in contrast with 2006 to 2010, when dispersion was relatively higher and there was more room for stock-pickers to win. In fact, over the past decade, only in 2006, 2008 and 2010 did non-index equity funds as a whole outperform the index,” Papa Securities said in a research note.

“What would cause dispersion to go higher? We think that introducing short-selling to the market would increase the variation of returns. After all, we have relatively low dispersion compared to more mature markets; the S&P 500 has dispersion ranging from 4 percent to 15 percent. Inversely, the proliferation of ETFs (exchange-traded funds) could decrease dispersion as well as increase correlation between equities,” it added.