Shares near bear territory on overseas tensions

LOCAL EQUITIES tumbled on Wednesday, moving closer to bear territory amid rising tensions between the United States and China.

The benchmark Philippine Stock Exchange index ( PSEi) extended its losing streak to a fifth day, dropping 0.69% or 50.99 points to 7,261.62 yesterday. This is the lowest close since March 27, 2017, when the market finished at 7,245.97.

The broader all-shares index lost 0.48% or 21.49 points to 4,460.22.

“After peaking at 9,078 in January this year, the PSEi closed in the bear territory today after the trade tension between the US and China worsened this week. Investors have turned risk-averse towards the equities market since the trade rift between the two largest economies won’t do anything good for the global growth,” Timson Securities, Inc. trader Jervin S. de Celis said in a mobile message on Wednesday.

The PSEi will officially enter bear market territory should it close at 7,246.896, or a 20% drop from its record high of 9,058.62 recorded last Jan. 29.

Foreign funds continued to exit the market, with net foreign outflows reaching P772.56 million, slightly lower than Tuesday’s P867.92-million net sales.

Regina Capital Development Corp. Managing Director Luis A. Limlingan said local and regional developments kept the market on the sidelines, “with minimal value turnover and very few investors wanting to take a risk.”

Investors were also being cautious ahead of the Bangko Sentral ng Pilipinas’ meeting. The local central bank raised rates anew yesterday following a similar move in May in a bid to arrest future inflation and keep local yields competitive.

The Monetary Board raised policy settings by another 25 basis points ( bp) during their fourth review for the year, the BSP announced after the market’s close. Rates now stand at 4% for the overnight lending rate, 3.5% for the overnight reverse repurchase rate, and 3% for the overnight deposit rate.

“I also think that investors would choose safer havens like bonds now that we are in an environment where most central banks are raising rates,” Mr. De Celis said.

The mining and oil sector was the lone sub-index that managed to eke out gains, rising 0.24% or 23.71 points to 9,706.84.

Holding firms led the decline, dumping 0.99% or 72.09 points to 7,179.16, followed by services which slipped 0.55% or 8.07 points to 1,436.35. Industrials shed 0.42% or 44.52 points to 10,509.51; financials went down 0.42% or 7.63 points to 1,808.40; while property dipped 0.29% or 10.64 points to 3,547.60.

Some 1.7 billion issues switched hands for a P5.33- billion turnover, slowing from the previous session’s P6.89 billion. Decliners trumped advancers, 103 to 92, while 45 issues closed flat.

Timson Securities’ Mr. De Celis said it is still unclear when the sell-off will end, given the continued exit of foreign investors from emerging markets. •