Stocks sink deeper into bear territory

MANILA, Philippines — The stock market continued to bleed yesterday, sinking deeper into bear territory as investors dumped more Philippine equities on rising uncertainties.

The benchmark Philippine Stock Exchange index (PSEi) plunged 163.47 points to settle at 7,098.15.

The latest closing level was the lowest since Jan. 4, 2017 when the index closed at 7,030.95 points.

Traders said market investors are staying on the sidelines and dumping Philippine stocks as the overall sentiment remains bearish and confidence in local equities has not returned.

Not even the move of the Bangko Sentral ng Pilipinas (BSP) to raise rates to 3.50 percent from 3.25 percent was enough to prevent the market from sinking further.

The broader All Shares index was likewise on a tailspin, ending 91.01 points lower at 4,369.21.

The sectoral indices also ended in negative territory with the property index taking the biggest hit with a decline of 3.54 percent.

Yesterday’s net foreign selling stood at P2.265 billion, the biggest since April 19. It also brought the year to date net foreign selling to P64 billion.

Astro del Castillo, managing director at First Grade Finance Inc. said market investors remain risk averse.

“Most investors are shifting from the equities to safer financial assets given the uncertainties. The lack of incentives is adding to the pressure. The rate cut announcement failed to give the market a shot in the arm,” Del Castillo said.

Given the prevailing bearish sentiment, it’s unlikely that investors would soon go hunting for bargains, at least not yet.

“Stock prices are now too tempting but seems like most investors will remain on the sidelines with only a few braving to hunt for bargains,” he said.

Justino Calaycay of Philstocks Financials said there remains a lot of uncertainties for the market.

“Higher domestic interest rates with possibly one or two more moves this year, an inflation rate that is yet to peak, depreciating peso and sustained foreign funds outflow are but some of the local issues we have to contend with. Challenges to global trade – spurred by the US’ initiative on imposing new or additional tariffs on goods entering its shores, world oil production and supply,” he said.

Gio Perez, a trader at Papa Securities, said the PSEi is definitely in bear market territory now as it is already 21.8 percent below its 52 week high of 9,078 last January 29.

He said today is critical as it would help determine the future direction of the market and whether or not the index would fall below the 7,000 mark.

“A powerful break below a support like this with a value turnover of P7.9 billion, the highest for the week, is sure to be significant. We therefore watch for the next major support at the psychological level of 7,000,” Perez said.