Main index tumbles near 2-month low on profit taking

MANILA, Philippines - Local share prices retreated yesterday as investors locked in profits following Monday’s strong rebound, traders said.

“Sentiments were dampened by the weakness in the major bourses abroad. New concerns emanating from abroad again spooked investors who were already on a bargain hunting mode,” AB Capital Securities said in a report on its website.

It noted that prior to Monday’s technical rebound, the market actually declined for six consecutive days. Yesterday, the main composite index or PSEi closed down 70.01 points or 1.69 percent to 4,069.31, its lowest level since Sept. 23 this year. 

The broader all-shares index also fell 27.55 points or 1.03 percent to 2,652.35 as all sub-sectors were in the red, with the industrial index dropping the most brought about by the sell-off in major food companies Jollibee Foods Corp. and Universal Robina.

Market breadth was bearish with losers whipping gainers 94 to 39,while 39 issues ended flat. 

“External concerns are putting negative pressures on the local market. China is starting to feel the heat of rising inflation and government officials are now drafting measures to counter it,” AB Capital pointed out.

Rising inflation is seen to put pressure on the Chinese government to raise interest rates. 

AB Capital also cited a looming debt crisis in Ireland, which is negotiating with the European Union and International Monetary Fund on a possible aid to shore up the country’s deteriorating finances.

“The market is feeling the weight of these external woes and there is no fresh positive catalyst that could counter it. If the local main composite index fails to hold at its current levels, we could see the index test the support levels of between 3,900 to 4,000,” AB Capital said.

 “The PSEi is currently holding at these levels, consolidating for three trading sessions now. The domestic economy continues to be healthy with the country’s outlook being upgraded, interest rates at record lows and earnings remaining strong. The local market is also currently trading at around 13x PE, among the cheapest in the region. Investors are advised to accumulate and turn aggressive once the markets abroad rebound.”