Local stocks tank on drop in oil, MSCI’s China call

THE Philippine Stock Exchange index (PSEi) barely budged on Wednesday, falling by 31.49 points or 0.39% to 7,886.37 to extend its losses for a second straight session.

It tracked emerging equities that languished for a second day following a drop in oil and amid worries that Asian markets could see investment outflows as a result of MSCI’s decision to include China in a benchmark share index.

“Due to lack of positive news and pleasant surprises, PSEi loses steam in breaching 8,000 and peaking,” said Alexis Cabel, research head and cofounder of Corpecon Data Research Services.

He expects support to mirror the level reached by the main index in January and February this year.

Jonathan L. Ravelas, BDO Unibank, Inc. chief market strategist, said the market had remained range-bound, with the PSEi moving between 7,700 and 8,000 levels.

Harry G. Liu, president of Summit Securities, Inc., expects the index’s support at between 7,650 and 7,700 while the resistance at 8,000 to 8,020.

Overseas, a number of indicators came out unfavorably for local stocks, said Luis A. Limlingan, business development head at Regina Capital Development Corp.

“Shares were dragged down with US stocks declining, oil prices slumping into a bear market, and the unexpected inclusion of China’s A-shares into the MSCI index,” he said. “Crude futures sank to a 10-month low amid worries of a supply glut. West Texas Intermediate ( WTI) was down 2% to $43.23/ barrel in Nymex — the lowest since August,” he added.

Index provider MSCI had announced that China’s domestic A-shares would be included in the equity index, a move that could result in an estimated $81 billion in potential inflows to onshore equities in the coming years.

“As such, inclusion is unlikely to result in a significant shift in the underlying flow picture, in our view,” he said.

Along with PSEi, the wider allshares index slipped by 10.45 points or 0.22% to finish at 4,708.79.

Losers outnumbered gainers at 107 to 94, while 41 stocks finished unchanged. Value turnover improved to P8.14 billion, up 15% from P7.08 billion the other day.

Services led the losing sectors as the sub- index gave up 19.45 points or 1.11% to close at 1,726.38. Property was down 30.14 points or 0.80% to 3,707.73, financials slipped by 3.27 points or 0.17% to 1,922.73 while industrials finished unchanged at 11,154.03.

Holding firms gained 9.73 points or 0.12% to 7,809.99, while the mining and oil index rose by 4.06 points or 0.03% to 12,497.26.

Yesterday’s session ended with foreign funds reverting to being net buyers of local shares at P337 million. They were net sellers the other day at P374.78 million.

GT Capital Holdings, Inc. led the most active stocks with a total trading value of P649 million. Universal Robina Corp., SM Prime Holdings, Inc., Ayala Land, Inc. and Ayala Corp. rounded out the top five.