Shares slump anew as lira’s drop dents sentiment

THE MAIN INDEX slumped on Thursday, ending at the 7,500 level as investor confidence continued to take a hit from the plunge in Turkey’s currency.

The bellwether Philippine Stock Exchange index (PSEi) dropped 0.31% or 23.56 points to finish at 7,517.36 yesterday, quickly reversing gains posted in the previous session.

The broader all-shares index likewise lost 0.21% or 9.65 points to 4,585.40.

“Shares traded lower, with continued fears over the challenges facing the Turkish contagion along with the fall of remittances,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message.

Papa Securities Corp. trader Gabriel Jose F. Perez noted the same, saying “it was a quiet day for the PSEi…as continued tensions and uncertainties in Turkey continued to weigh down on investor sentiment.”

The continued fall in the Turkish currency, the lira — due to soaring inflation, economic mismanagement by its government as well as tension with the United States — has caused a flurry of worry in the past days worldwide amid fears the economic crisis could spread to other emerging markets.

“Emerging markets in Asia have been on edge this week, following the 30% sell-off in TRY (Turkish lira) and 7% intraday move in ZAR (South African rand) on Monday morning. US stocks came off intraday lows but still closed down as worries surrounding Turkey’s currency crisis weighed on investor confidence,” Mr. Limlingan added.

Wall Street plunged after staging positive performances last Tuesday. The Dow Jones Industrial Average lost 0.54% or 137.51 points to 25,162.41. The S&P 500 index slipped 0.76% or 21.59 points to 2,818.37, while the Nasdaq Composite index shed 1.23% or 96.78 points to 7,774.12.

Most Asian indices also ended in negative territory due to fears of a Turkish contagion.

Financials was the lone sectoral index that managed to eke out gains back home, rising 0.15% or 2.79 points to 1,822.79.

The industrials sub-index led the day’s decline, giving up 0.98% or 108.15 points to 10,905.87, followed by holding firms which shed 0.55% or 41.22 points to 7,372.47. Services likewise slumped 0.08% or 1.2 points to 1,498.63; mining and oil dipped 0.01% or 1.87 points to 9,901.49; while property also went down by 0.01% or 0.36 point to end at 3,703.07.

Some 1.06 billion issues valued at P5.40 billion switched hands, slightly higher than the previous session’s P5.12 billion.

Net foreign outflows went up to P884.02 million on Thursday versus the P645.47-million net sales recorded on Wednesday.

Decliners outpaced advancers, 108 to 91, while 49 issues remained unchanged.

“The level to watch out for [Friday] would be 7,500. While the index did breach it [on Thursday], we’ll need to see a close below this level with high volume to have a firm conclusion,” Papa Securities’ Mr. Perez said. •