Philippine stocks dip due to profit-taking, Euro debt woes
MANILA, Philippines—Profit-taking caused local stocks to break down the main index support at 4,600 on Monday as credit rating downgrades in Europe dampened regional sentiment.
The main-share Philippine Stock Exchange index shed 34.91 points, or 0.76 percent, to finish at 4,578.92 in thin trade, pulling back for the second straight session after carving new peaks until Thursday last week.
The start of the impeachment trial against Supreme Court Chief Justice Renato Corona hardly affected the local market, which followed the cautious sentiment across the region.
“It is difficult to see sentiment improving this week, with risk aversion set to remain elevated as eurozone leaders attempt to restore confidence,” investment bank Credit Agricole CIB said in its daily market outlook. “S&P [Standard & Poor’s] rating action was partly expected, but the timing of the announcement and the selective approach among eurozone countries were a bit surprising.”
S&P recently lowered the long-term ratings on Cyprus, Italy, Portugal, and Spain by two notches and the long-term ratings on Austria, France, Malta, Slovakia and Slovenia, by one notch.
Manny Cruz, chief strategist at Asiasec Equities, said investors worried more about the credit downgrades in Europe especially as this may adversely affect an upcoming bond offer by France.
At the local market, the property counter, which had been an outperformer in previous days, succumbed most to profit-taking, sagging by 1.8 percent.
Only the mining/oil counter was buoyant as its index rose by 1.18 percent. Investors loaded up on shares of Manila Mining A (open only to local investors) and B (open to all investors), Semirara and Lepanto A and B.
Value turnover was light at P3.9 billion. There were 67 advancers, which were edged out by 91 decliners, and 51 stocks were unchanged.
The PSEi was weighed down most by profit-taking on PLDT, BDO, Metrobank, RLC, SMIC, AC, Megaworld and BPI.
Apart from Semirara, other PSEi stocks that bucked the day’s downturn were DMCI, EDC and Meralco. The non-index stocks that traded favorably were LR and EEI.
Fund manager Gus Cosio, president of First Metro Asset Management Inc., said the start of the impeachment proceedings against Corona could be a “fly in the ointment.”
“While this could go on with very little effect on the capital markets, political issues tend to blind side market participants from time to time. The worst-case scenario is a constitutional crisis resulting from any decision by the Supreme Court on pending petitions seeking to question the impeachment process. Right now, it is all up to the Senate; but if the Supreme Court asserts itself, we could be in for trouble,” Cosio said on Monday in his blog.
“In the meantime, I think it is more productive to follow the flows from institutional funds stating their commitment to our market,” Cosio said, citing the optimism on emerging markets by global fund management guru Mark Mobius of the Templeton group. “At the end of the day, it is really money flow that counts; and if Mr. Mobius is to be listened to, the sentiment may be the stronger influence in our market.”
