PSEi extends fall ahead of US GDP, Fed decision

SHARE PRICES pulled back yesterday, with the main index barely managing to stay above the 7,800 line, as investors awaited US economic growth data and the conclusion of the Federal Reserve’s policy meeting, and continued to lock in gains amid concerns over lofty valuations, analysts said.

The bellwether Philippine Stock Exchange index (PSEi) fell by as much as 98 points yesterday before trimming its losses to close at 7,825.47 — down by 61.10 points or 0.77% from Tuesday’s finish.

The broader all-shares index also slid 27.75 points or 0.61% to settle at 4,496.22.

“We’re really high in every metric you look at. There’s a lot of reason to sell and not much reason to buy. Even if the foreign funds stop selling, I’m not sure if there are a lot of buyers out there,” Miko A. Sayo, trader at Angping & Associates Securities, Inc., said in a phone interview.

The PSEi shattered record levels 27 times this year, the last of which was on April 10 when it closed at 8,127.48. Since then, however, investors have been locking in gains.

“ASEAN is traded as a basket so when Indonesia and Thailand started falling, the Philippines followed as well...,” Miguel A. Agarao, analyst at Wealth Securities, Inc., said in a phone interview.

“Foreign funds are holding back from taking an aggressive position until the [ gross domestic product] numbers in the US are out,” Mr. Agarao added.

An initial read of the US economic growth in the first quarter is due today, at the same time the Federal Open Market Committee concludes a two-day policy meeting with investors watching out for signals on when it will raise interest rates.

All counters finished in negative territory. Mining and oil lost 210.66 points or 1.38% to 15,096.35 and holding firms shed 77.37 points or 1.10% to 6,988.37 to lead the market’s losses.

Likewise, services went down by 20.55 points or 0.95% to 2,149.08; financials slid 10.31 points or 0.57% to 1,796.88; industrial slipped 24.56 points or 0.20% to 12,309.04; and property dipped 4.66 points or 0.15% to 3,167.06.

Value turnover improved to P9.66 billion yesterday after 1.42 billion shares changed hands, from Tuesday’s P9.28 billion.

Losers dominated advancers, 105 to 78, while 49 stocks closed flat.

Net foreign selling accelerated to P724.27 million from the previous session’s P619.19 million.

The main index could drop to as low as 7,500 should it breach the 7,776 level, analysts said.

Local equities may be vulnerable to wild price swings until Philippine gross domestic product ( GDP) data are released on May 28, Wealth Securities’ Mr. Agarao said.

“We might get some rallies by mid-May because of the announcement of first-quarter corporate earnings, but that’s company-specific and the market is weak. Unless companies really outperform estimates, we may still drop in the next few weeks,” Angping & Associates Securities’ Mr. Sayo said. —