Market plunges on heavy selloffs

MANILA, Philippines - The Philippine stock market, coming from a three-day trading break, played catch up to Asian markets’ slump as it plummeted to near historic low on heavy selling.

The Philippine Stock Exchange index (PSEi) slumped 5.96 percent or 389.22 points to settle at 6,136.73, marking the deepest decline since a sharp fall last month.

On June 13, the main index sank 6.75 percent, the deepest single-day drop since the collapse of US investment house Lehman Brothers which  saw the index plunging 12.27 percent on Oct. 27, 2008.

PSEi pared losses in the afternoon session after falling to an intraday low of 6,074.02 in early trading.

“We were flooded by selling today. The concerns are still external given the impact of the tapering in US Federal Reserve’s bond buying program,” Astro del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

“The PSEi appears to have played catch up to its peers and global markets as sentiments stayed cold on lingering concerns over the Fed’s stimulus action,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

“Local investors released their pent-up sentiments that the holidays bottled up,” Calaycay added.

PSE suspended trading on Monday and Tuesday due to heavy rains and floods that disrupted banking operations like clearing and settlement while the financial markets were closed on Wednesday in commemoration of the Benigno “Ninoy” Aquino Jr. Day.

In the past few days, Asian markets and Wall St. were mostly in the red as investors await the minutes of the US Fed meeting in July.

On Wednesday, Wall St. fell anew as minutes of the US Fed meeting showed that officials favored the pullout of the stimulus program that has been boosting liquidity in financial markets.

The Dow Jones industrial average retreated 0.2 percent or 25.50 points to 15,542.24 while the broader Standard & Poor’s 500 index slipped 0.4 percent or 6.45 points to 1,685.94.

Calaycay said Asian markets also failed to lift investor sentiments.

“The weaknesses among Thailand and Indonesia, as well as India aggravated the outlook already reeling from the slowing of the Chinese economy,” Calaycay said.

Locally, all counters were in the red, paced by property sector that lost 7.94 percent or 206.16 points to 2,390.21 and holding firms that declined 7.62 percent or 440.52 points to 5,339.07.

Turnover value picked up to P12.25 billion from P5.57 billion on Friday. Net foreign selling stood at P4.73 billion yesterday.

There were 11 decliners for each advancer, while 22 stocks did not change.

“The market has since bounced from the intraday low but this plunge has further obscured the market’s longer-term direction,” said RCBC Securities Inc.

Moving forward, RCBC Securities advised investors to focus on high dividend-yield stocks considering intact corporate fundamentals.

Further declines are expected from the local stock market given another long weekend.

“There is a selling momentum. It looks like there will be a further slide today,” del Castillo said, adding that psychological support is 6,000.

For Calaycay, the main index is now approaching a crucial technical support at 5,900.

“The surge in value yesterday could indicate either a fresh negative momentum, or a climax sell-off,” Calaycay said.