PSE heads for correction as BoP deficit data bite

LOCAL EQUITIES changed direction and finished on a sour note on Tuesday as the peso weakened further against the greenback and the government reported that the country’s balance of payments (BoP) swung to a deficit in May, analysts said.

“With the Philippines seeing a current account and BoP deficit, the peso depreciated,” said Miguel A. Agarao, vice-president of Philequity Management, Inc.

“Thus, the stock market may be headed for a consolidation or correction.”

On Monday, the Bangko Sentral ng Pilipinas (BSP) reported that the country’s BoP position reverted to a deficit in May as imports increased while short-term capital investments moved out.

Yesterday saw the Philippine Stock Exchange index (PSEi) lose 25.89 points or 0.32% to finish at 7,917.86 and the all-shares index slip by 3.97 points or 0.08% to 4,719.24. Save for mining and oil, the five other sector indices retreated.

Noting that technology stocks helped fuel Wall Street to hit record highs,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said “[ g]ains in the US tech sector were apparently limited as they did not extend to the Philippine markets this trading session.”

“Local stocks saw some profit taking after a sharp run up the previous day,” he added.

Value turnover at P7.08 billion was just slightly less than the previous day’s P7.09 billion. Gainers outnumbered losers at 95 to 91, while 52 issues finished unchanged.

All six sectoral indices moved by less than a percentage point.

Mining stocks edged 27.55 points or 0.22% higher to finish at 12,493.20.

Holding firms led losers as they gave up 34.23 points or 0.43% to close at 7,800.26. Financial issues dropped 4.25 points or 0.22% to 1,926, property fell by 7.07 points or 0.18% to 3,737.87, services slipped by 2.61 points or 0.14% to 1,745.83 while industrials ceded 4.02 points or 0.03 to 11,154.46.

Foreigners extended their sale of local stocks as the session closed with a net selling of P374.78 million, more than twice Monday’s P165.86 million.

Mr. Limlingan earlier said the market was awaiting the outcome of the BSP’s policy meeting this Thursday, even as it is widely expected to leave the overnight reverse repurchase rate at three percent, the overnight deposit rate at 2.5% and the reserve requirement ratio at 20%.

Harry G. Liu, president of Summit Securities, Inc., said traders were also awaiting the release of listed firms’ second- quarter financial results, which could fuel PSEi to once again touch 8,000 and possibly stay above that level.

Mr. Liu said some research may have estimates before the month ends of the performance of firms they were monitoring, hence, the market might react earlier than the reporting period.

“If a lot of reports from the companies are positive, then there will be a reaction in the market,” he said, adding that “political conditions” had already been factored into investors’ decisions. —