PSEi suffers worst fall since June 2020

The local stock market succumbed to its worst bloodbath in over a year on Friday, dragging the local stock barometer to the 6,300 level, as fund managers scrambled to align their portfolios with the latest local index adjustments.

The main-share Philippine Stock Exchange index (PSEi) slid by 236.38 points or 3.61 percent to close at 6,320.19, underperforming most regional peers.

This marked the PSEi’s steepest decline since June 15, 2020, when it slumped by 4.82 percent.

“The PSEi fell sharply on Friday, not because of the continued increase in daily COVID-19 cases, but as a result of the recent index rebalancing. While the public was focused on AC Energy and Converge as these stocks will replace Emperador and DMCI, it was not really publicized that the weights of AGI, SMC, SM Investments, Jollibee, URC, AEV, LTG, JG Summit, Ayala Land and ICTSI were also reduced,” said Ron Acoba, chief investment strategist at equities research provider Trading Edge.

Rebalancing

The latest PSEi rebalancing will take effect on Monday, Aug. 16. As such, Friday was the last day for index-tracking funds to align themselves with the latest PSEi composition and weights.

“Note that with passive index funds totaling about P150 billion, a 0.2 percent reduction in the weight of say SM Investments already translated to an outflow of more than P200 million. The same went for the other names,” Acoba said.

“Now, come Monday, I expect these names and the index in general to gap up back to 6,500 to 6,600 as trading normalizes,” he added.

The day’s two most actively traded companies were AC Energy and Converge, which surged by 6.58 percent and 1.86 percent, respectively, ahead of their debut into the PSEi on Monday.

But the main index itself was weighed down most by the holding firm and property counters, which fell by 5.21 percent and 3.88 percent, respectively.

Buying opportunity

The services counter likewise declined by 2.54 percent, while the mining/oil and industrial counters both shed over 1 percent.

The financial counter ended marginally higher.

Value turnover was heavy at P14.36 billion. Amid the bloodbath, foreign investors saw a window of buying opportunity, resulting in a net foreign inflow of P259.73 million.

There were 134 decliners that overwhelmed 63 advancers, while 45 stocks were unchanged.

Investors sold down shares of SM Investments and Jollibee, which both lost over 6 percent, while JG Summit and URC declined by over 5 percent.

Ayala Land and ICTSI dropped by nearly 5 percent, while SM Prime lost 3.87 percent.

Ayala Corp. and BDO declined by over 2 percent, while Emperador shed 0.33 percent ahead of its exit from the PSEi.

Outside the PSEi, newly listed Monde Nissin tumbled by 5.93 percent, while Semirara lost 3.15 percent.

Security Bank defied the day’s downturn, gaining 4 percent, while Meralco and BPI both added over 3 percent.

DMCI rebounded by 1.72 percent ahead of its PSEi exit, while PLDT added 0.79 percent.

For the week, the PSEi lost a total of 219.72 points or 3.36 percent.