Bears take over as index plunges to 15-month low

MANILA, Philippines — The local stock market officially slipped into bear territory yesterday ahead of the policy meeting of the Bangko Sentral ng Pilipinas (BSP).

The benchmark Philippine Stock Exchange index (PSEi) declined by another 50.99 points to close at 7,261.62, the lowest level since March 27, 2017 when the market closed at 7,245.97.

Yesterday’s close officially put the market in bear territory or 20 percent below its highest recorded level for the year using the January 29 closing level of 9,058.62.

Except for the mining and oil index, all other indices slipped in the red. The holding firms index lost 0.99 percent followed by the services which ended 0.55 percent lower. The rest of the counters were not far behind.

Total value turnover stood at P5.334 billion. Market breadth was negative, 103 to  92 in favor of declining stocks. Forty five issues were unchanged.

Traders said the market officialy entered bear territory one hour before the release of the results of the BSP meeting. The BSP finally decided to raise interest rates by 25 basis points to 3.50 percent from 3.25 percent previously.

A rate hike was expected to calm the peso and the stock market, but investors did not know for sure until monetary authorities emerged from their meeting yesterday.

Luis Limlingan, managing director at Regina Capital, said market investors speculated on the outcome of the BSP meeting although the market should have traded higher.

But a host of other factors including renewed jitters on a US-China trade deal also dampened sentiment and moved the market to bear land.

To put it simply, market investors were not ready to take risks.

“A series of local and regional developments kept the market on the sidelines with minimal value turnover and very few investors wanting to take a risk,” Limlingan said, noting that President Trump identified $200 billion in Chinese goods to be slapped additional tariffs of 10 percent with another $200 billion if Beijing retaliates.

In a similar commentary, Gio Perez of Papa Securities said most investors stayed on the sidelines yesterday prior to BSP meeting.

In terms of specific issues JG Summit lost 4.4 percent, while another conglomerate Aboitiz Equity Ventures shed 3.9 percent.