PSE index drops on Robredo, Renzi resignations

STOCKS slumped at the start of the week following Vice-President Maria Leonor G. Robredo’s resignation from her post in the Cabinet and the result of the Italian referendum that caused Prime Minister Matteo Renzi to also step down from his post.

The bellwether Philippine Stock Exchange index dropped 1.60% or 110.33 points to 6,776.41 points.

The broader all-shares index also slid 1.14% or 47.84 points to close Monday’s trading at 4,118.65 points.

“The PSEI just tracked the broader Asian market following the result of the Italian referendum which failed. So it establishes nationalist movements like ‘ Brexit’ and [ US President Donald J.] Trump’s election,” said Ralph Christian G. Bodollo, equity research analyst at RCBC Securities, Inc., in a phone interview on Monday, adding that local stocks saw “much deeper” losses compared with its Asian counterparts.

Mr. Bodollo added that Ms. Robredo’s resignation from her post in President Rodrigo R. Duterte’s Cabinet, with the question of her keeping the vice-presidency causing risk aversion.

Ms. Robredo announced on Sunday her resignation as chairperson of the Housing and Urban Development Coordinating Council, a post she occupied for barely five months, following instructions from Mr. Duterte ordering her to stop attending Cabinet meetings.

Victor F. Felix, equity analyst at AB Capital Securities, Inc., said Ms. Robredo’s resignation “just adds to the level of political risk that the country has.”

“In terms of foreign investors, maybe they feel it’s getting riskier to invest in the Philippines,” Mr. Felix said in a phone interview, adding that the local market may hover at 6,700 to 6,800 levels for the rest of the week.

Foreigners continued to dump shares on Monday, with net selling increasing to P300.61 million from Friday’s P223.34 million.

The holding firms sub-index slumped 159.25 points or 2.27% to 6,856.58; property declined 56.44 points or 1.85% to 2,994.03; industrial went down 112.33 points or 1.02% to 10,904; financials gave up 16.52 points or 0.97% to 1,674.24; and services edged down 1.11 point or 0.09% to 1,279.03.

Only the mining and oil counter ended in the green, rising 33.40 points or 0.28% to close the session at 12,127.96.

Decliners outnumbered advancers, 124 to 61, while 39 issues were unchanged.

Value turnover declined to P5.26 billion yesterday from Friday’s P6.85 billion after 742.48 million shares changed hands.

RCBC’s Mr. Bodollo said the main index may extend its slump today as investors remain cautious ahead of the US Federal Reserve’s policy meeting on Dec. 13-14.

“There will be a possibility of a further slide because we closed at the low. There might be momentum [today] and the Fed meeting is next week, so we expect some investors to stay on the sidelines before that,” Mr. Bodollo said.