PH shares down on trade gap woes

The local stock barometer struggled to stay afloat the 7,000 mark on Wednesday as foreign funds continued to snub local equities.

The main-share Philippine Stock Exchange index (PSEi) shed 58.24 points or 0.82 percent to close at 7,001.14 as the Philippines reported a wider trade gap in August.

The index fell below this support level in intraday trade.

Elsewhere in the region, trading sentiment was mixed.

On Wednesday, it was reported that the Philippine trade deficit for August 2018 surged by 38.2 percent year-on-year to $3.51 billion.

“Despite protracted weakness in the Philippine peso, exports continue to underperform, posting a 2-percent contraction year-to-date and only a feeble 3.1-percent growth in August.  In turn, the weaker currency may have fomented even more inflationary pressure given the hefty import bill related to consumption and transportation,” ING Philippines economist Nicholas Mapa said.

Mapa said recent strong rhetoric from the central bank in response to soaring inflation and a weakening peso could help stem the currency’s weakness and prevent the trade gap from widening further.

“But exports will need to rebound in the coming months to truly make some headway. The prognosis is for the current account to remain in the red, exerting further pressure on the local unit despite BSP (Bangko Sentral ng Pilipinas’) already very hawkish stance,” he said.

All counters ended in the red, led by the financial and holding firms which both slipped by close to 1 percent.

Value turnover was thin at P3.69 billion. There was P507.96 million in net foreign selling for the day.