Market drops below 6,000; peso falls

MANILA, Philippines - Continuous foreign selling amid external worries dragged the bellwether stock index to a six-month low yesterday and nearer bear market territory.

At the same time, the peso hit a fresh 17-month low versus the greenback as investors expect positive data from the US this week to support a pullout of stimulus measures later this year.

The Philippine Stock Exchange index (PSEi) sank 3.41 percent or 211.12 points to end at 5,971.05, its lowest since closing at 5,934.05 on Jan. 4.

After hitting its 31st all-time high this year at 7,392.20 on May 15, the PSEi has since fallen 19.22 percent. A 20 percent or more decline marks the start of the bear market.

Meanwhile, the local currency closed at 43.84 against the dollar, losing 12 centavos versus its close last Friday at 43.72.

The close was the peso’s weakest against the US currency since Jan. 16, 2012 when it hit 43.88. Last Friday, the peso touched the 44-level, a two-year low, before it bounced back to close stronger.

“We broke down below 6,000 psychological support, trailing regional bourses’ performance,” said Freya B. Natividad, investment analyst at Papa Securities.

“I think the weakness stemmed from continued sell-off of foreign fund managers in the local bourse,” she said.

Net foreign selling hit P557.77 million yesterday.

Justino Calaycay Jr., an analyst at Accord Capital Securities, said attention shifted to the growing weakness of the Chinese economy.

“Bears kept its dominance, threatening to wipe out all the gains for the year-to-date,” Calaycay said. The PSEi ended 2012 at 5,812.83.

Asian shares were likewise battered as worries over the easing of the US Federal Reserve’s stimulus program persisted. Investors also feared the slowdown in China, the world’s second largest economy.

As of yesterday, the peso, Asia?s second best performer last year, has already weakened 6.8 percent against the dollar since Dec. 28, the last trading day of 2012. On average, it gained that much last year.

?It?s really hard to tell if the BSP (Bangko Sentral ng Pilipinas) was in the market but they have been saying that they will prevent sharp fluctuations from happening,? the trader said.

Japan’s Nikkei 225 fell 1.26 percent or 167.35 points to 13,062.78 while Hong Kong’s Hang Seng index dropped 2.22 percent or 449.33 points to 19,813.98.

Locally, all counters were in the red, led by financial companies that sank 4.69 percent or 75.27 points to 1,531.09.

Turnover eased to P8.59 billion from P12.96 billion on Friday. Decliners dominated advancers, 165 to 17, while 34 stocks did not change.

All active shares were in the red, with firms like PLDT (-1.43 percent), Metrobank (-6.91 percent), Alliance Global Group (-5.58 percent) and SM Prime (-5.03 percent) posting hefty declines.