PSEi drops below 7,000 anew on Fed hike jitters

THE MAIN INDEX slipped below the 7,000 line again on Monday despite hopes of an extended rebound amid the lack of local catalysts and lingering concerns over a possible US Federal Reserve rate hike next month.

After two days of gains, the Philippine Stock Exchange index (PSEi) declined anew yesterday as it closed at 6,979.06, down 1.25% or 88.67 points from Friday’s close.

The all shares index also dropped 0.74% or 31.66 points to 4,222.62.

“It’s a combination of negative news and external concerns and as well as local. We are seeing continued net foreign selling for the past few days,” said Lexter L. Azurin, assistant vice-president and head of research at Unicapital Securities, Inc.

He said the continued outflows in the market was due to local equities’ expensive valuations compared to the rest of the region.

“At the end of the day, investors are looking at valuations. There is no denying that despite the weakness in the Philippine market, we’re still at a premium at the rest of the region. The concern is a shift of funds from emerging markets back to the developed economies,” Mr. Azurin said.

Luis A. Limlingan, managing director of Regina Capital Development Corp., said overall, there was a negative sentiment in the local market despite the gains posted last Thursday and Friday.

“Since we rebounded last week, investors just saw an opportunity to profit.”

Mr. Limlingan added that there was lack of catalysts, which caused investors to focus on the possibility of a Fed interest rate hike before yearend.

Unicapital’s Mr. Azurin also noted that corporate earnings were quite benign, which further dampened sentiment among investors.

“There are some weakness in terms of corporate earnings, and investors are having a hard time justifying current valuations, so most of the investors are liquidating softer positions.”

All sub-indices were in the red. Property led the bloodbath with a decline of 1.9% or 60.11 points to close at 3,103.94, followed by mining and oil which closed 1.27% or 155.30 points lower at 11,989.96. Holding firms slid 1.16% or 83.12 points to at 7,080.28; services went down 0.99% or 13.13 points to 1,311.02; financials declined by 0.71% or 12.40 points to 1,712.43; and industrials dropped 0.20% or 22.50 points to close at 11,153.79.

Advancers narrowly beat decliners, 88 to 86, while 49 names ended unchanged.

Value turnover slipped to P5.67 billion as 1.97 billion shares changed hands, from the previous session’s P5.96 million.

Foreigners continued to sell their shareholdings, although net outflows dropped to P694.43 million from Friday’s P867.79 million.

“It’s really a negative outlook moving forward. In a way investors are looking for new catalysts that can pull the market and bring back confidence in the market. So far we haven’t seen that yet. Investors are looking for more attractive valuations,” Mr. Azurin said. —