The local stock barometer entered bear territory in intraday trading on Tuesday as investors —mostly unnerved by the sharply depreciating peso and the escalating US-China trade war—dumped more equities ahead of a closely watched local central bank monetary setting.
At the close of trading, the main-share Philippine Stock Exchange index (PSEi) lost 101.5 points or 1.37 percent at a 15-month low 7,312.61, tracking the slump across US and regional markets. Foreign funds continued to exit the local market, resulting in P867.92 million in net foreign selling for the day.
The index hit a low of 7,253.12 in intraday trade, marking a 20-percent drop from the main barometer’s record peak of 9,078.37 hit last January. For BDO Unibank chief strategist Jonathan Ravelas, this marked a reversal to bear market even if the PSEi managed to bounce a bit from the day’s low.
“We are currently in bear market territory,” Ravelas said.
Beyond the US-China trade tension, Eagle Equities president Joseph Roxas said investors’ biggest concern was the strengthening of the US dollar, in turn resulting in large outflows of global funds from emerging markets like the Philippines.
“The US economy is picking up so funds that came to Asia over the last 10 years because of the problems in America are now moving back to America. And because the dollar is strong, the peso is weak relatively,” Roxas said.
For foreign investors with remaining exposure in the local market, the sharp peso depreciation was a concern because this would shrink the value of their funds once these are exchanged into dollars to be repatriated to their home markets.
Market sentiment is also weak ahead of the Bangko Sentral ng Pilipinas’ monetary policy meeting on Wednesday, during which another 25-basis point increase in interest rate is expected.
“It looks like the ball is in the BSP’s hands now in their upcoming meeting (June 20) as we’ve been seeing the devastating effects of a weakening peso to the PSEi in the past few days,” Papa Securities analyst Gio Perez said.
Given the PSEi’s sour performance, Perez said it seemed like the PSEi was set to approach the next definitive level between 7,100 and 7,150, where the long-term uptrend began in early 2016.
With the weak momentum in the market, Perez said “it might only be a matter of time before we see this area.”
All counters ended in the red, led by the financial, holding firm, services and mining/oil counters, which all slipped by more than 1 percent.
Value turnover stood at P6.89 billion. There were 125 decliners that overwhelmed 70 advancers while 47 stocks were unchanged.
LT Group led the PSEi’s decliners, losing 4.42 percent, while JG Summit, PLDT and Metro Pacific all lost over 3 percent.
SM Investments, the day’s most actively traded company, fell by 2.22 percent, while BDO and ICTSI all lost more than 2 percent. Metrobank, Ayala Corp. and Megaworld all slipped by over 1 percent.
Ayala Land, SM Prime, BPI, Meralco, GT Capital and Puregold also contributed to the day’s decline.
Among the few that bucked the day’s downturn were Jollibee and AEV, which gained by 2.45 percent and 1.97 percent, respectively.