Stocks snap 3-day rally as investors take profits

Local stocks took a breather yesterday, ending a three-day rally as investors cashed in on the market’s recent gains.

The bellwether Philippine Stock Exchange index (PSEi) finished at 6,673.50, down by 6.46 points or 0.10 percent, while the broader All Shares index slipped to 3,508.19, down by 3.25 points or 0.09 percent.

Value turnover reached P4.9 billion. Market breadth was negative, 105 to 67, while 51 issues were unchanged.

Elsewhere in Asia, Shanghai and Hong Kong stocks built on their recent rally as traders awaited fresh pledges of stimulus from Chinese officials a day after they announced a measure to boost bank lending, though other markets in the region fluctuated.

Another record close for the S&P 500 on Wall Street provided a positive lead for investors, while a string of data including on US economic growth and jobs could give some idea about the Federal Reserve’s plans for interest rates.

Shanghai and Hong Kong rose for a third straight day on hopes Beijing will put in place more help for the stuttering economy after Wednesday’s decision to cut the portion of cash banks must keep in reserve, a move aimed at freeing them up to lend more.

The 50-basis-point cut to the reserve requirement ratio (RRR) was the first since September and twice as big as usual, which analysts said showed officials were getting increasingly worried about the economic outlook.

Authorities also said they would unveil more support policies soon.

The cut added to an upbeat mood in the two cities that came on the back of reports that Alibaba co-founders Jack Ma and Joseph Tsai had bought about $200 million worth of shares in the firm in a signal of their confidence in the e-commerce titan.

“China is still worth watching given the valuations have come down so far,” JPMorgan Asset Management’s Kerry Craig told Bloomberg Television.

“There could be a near-term rally if we do see further policy announcements coming through.”

However, there were warnings that the government needed to do a lot more to restore confidence in the world’s number two economy, which has been hammered by a debt crisis in the vast property sector and weak overseas demand for its goods.

“While the RRR cut triggered an impressive rally, markets will struggle to go higher as investors have their focus back to the economic fundamentals and uncertainties ahead of crucial political meetings in the coming two months,” said Redmond Wong at Saxo.