PSEi slips on US jitters

The local stock barometer slipped for the second day in a row as investors fretted over the inability of a Republican-dominated US Congress to pass a healthcare legislation espoused by US president Donald Trump.

The main-share Philippine Stock Exchange shed 23.65 points or 0.33 percent to close at 7,245.97, tracking mostly sluggish regional markets.

At the local market, foreign investors were net sellers amounting to P520 million.

“Philippine markets slid once again due to an 11th hour decision from House Republican leaders to abandon their bill to replace the Affordable Care Act. Following the cancellation of the House vote on the health bill, Congress is likely to turn its attention to the Supreme Court nomination and budgetary issues. Preliminary discussions on tax reform could begin soon but we do not expect legislative action on tax reform until June,” said Luis Gerardo Limlingan, managing director at local stock brokerage Regina Capital Development.

Limlingan noted that US futures were continuing to indicate weakness following the US Congress’ failure to repeal the Obamacare act.

“With the US House of Representatives failing to support the AHCA (American Healthcare Act of 2017), the new administration’s focus has rapidly shifted to comprehensive tax reform. Although tax reform appears to have broader support and may be easier to pass, the AHCA experience sends investors a cautionary message about opposing factions within the GOP (Grand Old Party/Republican) caucus, especially with key details – especially around the implementation of border tax adjustments – still not having found support from the consensus. Thus, even though the market’s first reaction would likely be negative for reflation trades, another period of closely tracking developments in Washington appears to be likely,” Citigroup said in a research note.

Citi noted that emerging market (EM) investors, in particular, would likely focus closely on developments surrounding the border tax adjustment (BTA). “Even though the BTA constitutes an important revenue source for the funding of corporate and individual tax cuts, there remain significant concerns about its legality as well as on its potential impact on US corporates. The potential impact on emerging markets is also meaningful and thus any sign of stronger support for BTA is likely to pose a headwind to EM,” it added.

At the local market, the PSEi was weighed down by the financial, industrial and holding firms while the services, mining/oil and property counters firmed up.

Value turnover for the day amounted to P7.77 billion. There were 81 advancers which were outnumbered by 90 decliners while 51 stocks were unchanged.

The PSEi was weighed down most by Jollibee and Metrobank which both slipped by over 3 percent while Ayala Corp. fell by 2.31 percent.

Ayala Land and SM Investments both declined by over 1 percent.

On the other hand, PLDT gained by 3.12 percent while SM Prime, GT Capital, URC and LTG rose by over 1 percent. Semirara and BPI also firmed up.