Local shares plunge as investors fear US Fed decision
MANILA, Philippines — Local shares plunged for the second straight day, this time succumbing to jitters abroad as global equities worry the US Federal Reserve could aggressively raise interest rates.
The Philippine Stock Exchange index traded in the red on Tuesday, retreating 2.55% to close at 6,793.25. The broader All Shares index shed 1.9% of its value. All sub-indices took in losses, led by shares in the mining and oil index.
For April Lee Tan, research head for publicly-listed brokerage COL Financial, the local bourse followed Wall Street’s cue today.
“Weak performance of US market last night. This is because there will be a Fed meeting today and tomorrow. There might be concerns that the Fed will raise rates more aggressively or say something more disappointing,” she said in a Viber message.
Hernan Segovia, trader at Summit Securities, agreed with Tan’s assessment.
“If you are a superstitious trader, it seems the PSE index rebalancing has somewhat jinxed the market’s momentum,” he said.
The PSE tweaked the composition of its main index, among others on Friday. The local bourse said DMCI Holdings Inc. and Union Bank of the Philippines will replace Megaworld Corp. and Robinsons Land Corp. in the 30-member PSEi, which consists of listed companies with the biggest liquidity and market capitalization.
Segovia said that the local bourse has a “solid support range” at 6,640 to 6,750.
“Technically, I saw this pullback as a classic retest of the index breakout level at 6,800,” he added.
The bloodbath in the PSE effectively erased the market’s gains in the past two weeks, after whispers of a bull run left the market trading above the 7,000 level.
Hong Kong, which has led gains so far this year, was one of the worst-hit dropping close to 2%, while Tokyo, Shanghai, Sydney, Singapore, Taipei, Bangkok and Jakarta were also well in the red.
Seoul was dragged by a sharp fall in Samsung, which said fourth-quarter operating profits plunged nearly 70%, the biggest drop in more than eight years, as electronics and chips sales tanked.
Foreign investors sold P812.44 million more shares than they bought in the stock market. A total of 1.54 billion stocks, valued at P11.27 billion, switched hands on Tuesday. — with AFP
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