The local stock barometer slipped to the 7,600 mark on Friday as foreign funds trimmed their exposure to local equities following a hefty increase in the weighting of China A shares in MSCI indices.
The main-share Philippine Stock Exchange index (PSEi) lost 63.72 points, or 0.83 percent, to close at 7,641.77, underperforming regional markets.
Papa Securities said MSCI’s announcement that it would jack up the weighting of China A shares in its global benchmarks from 5 percent to 20 percent—which effectively raised the Chinese weighting in the emerging market index to around 3 percent from 0.7 percent—was market-moving.
China A shares refer to stocks of mainland Chinese companies that trade on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. The shares were previously available only to local investors but since 2013, qualified foreign institutions have been allowed to invest in these shares.
The reallocation of funds to China, Papa Securities said, could explain the heavy foreign outflows and the hefty PSEi decline seen since Thursday. On Thursday, there was P1.2 billion worth of net foreign selling, excluding the PAL block sale, while on Friday, net foreign selling even increased to P1.64 billion.
With the breakdown of the 7,700 level, the next support level is seen at 7,350, equivalent to December 2018’s low.
All counters ended lower, particularly the financial, services, mining/oil and property indices, which all lost more than 1 percent.
Value turnover amounted to P8.47 billion. There were 114 decliners that overwhelmed 64 advancers while 60 stocks were unchanged.
BDO, the day’s most actively traded company, fell by 3.06 percent. ICTSI, Metro Pacific and GT Capital all declined by more than 2 percent.
Notable decliners outside the PSEi included MacroAsia, which fell by 0.62 percent in relatively heavy trade.
On the other hand, Jollibee, Ayala Corp. and URC all gained.