Philippine stocks plunge in profit-taking

MANILA, Philippines—The local stock index tumbled sharply on Thursday due to profit-taking on index heavyweight PLDT, which was likewise the key driver of the local bourse’s stellar rise in previous weeks.

Despite improved risk appetite spurred by signs of growing monetary easing bias by the US Federal Reserve, the main-share Philippine Stock Exchange index lost 58.81 points, or 1.23 percent, to finish at 4,611.68.

The index was weighed down most by PLDT, which slid by about 4.5 percent to close at P2,652.

Trades on PLDT, which has a 15.8 percent weight on the PSEi, accounted for P1 billion out of P7.1 billion total turnover for the day.

“This is more of profit-taking since PLDT outperformed the market and [some investors are] shifting to other battered markets in North Asia,” said Bank of the Philippine Islands senior vice president Paul Joseph Garcia.

Fund manager Gus Cosio, president of First Metro Asset Management Inc., said these two factors dragged down PLDT on Thursday.

First, he noted that the Digitel shares converted into PLDT shares would be available for sale starting Friday. “They cost P2,500 and arbitrageurs are locking in profits,” he said.

The other factor was an “underperform” recommendation issued by investment bank Merrill Lynch on PLDT, Cosio said, which thus spurred profit-taking on the telecom giant.

“It is overbought and has outperformed the market since the start of the year…. Bottom line is, greed is a greater factor than fear in PLDT’s decline over the past three days,” said Jose Mari Lacson, head of research at local brokerage Campos Lanuza & Co.

Despite the overall index decline, advancers and decliners were on equal footing as 84 stock prices went up and an equal number declined, while 45 stocks were unchanged.

By sector, PLDT’s decline likewise pulled down the services counter by 3.1 percent while the property counter also dropped by a hefty 2.5 percent. The financial and holding firm counters were likewise slightly in the red.

On the other hand, the mining/oil counter defied the day’s downturn on the back of gains eked out by Philex and Lepanto B (open only to local investors).  Its counter rose by 1 percent while the industrial counter firmed up slightly.

Other stocks that contributed to the PSEi’s decline were Megaworld, Metrobank, DMCI, Semirara, AC, AGI, MPI and AP.