Philippine stocks slip into negative territory

MANILA, Philippines — The Philippine stock market returned to negative territory yesterday as investors opted to capitalize on profits following a sharp rise the previous day.

The benchmark Philippine Stock Exchange Composite index (PSEi) declined by 1.25 percent or 82.49 points to settle at 6,510.67.  The broader All Shares index slipped by 35.36 points or 1.01 percent to 3,475.05.

All the sectors were down with mining & oil as the biggest decliner.

D.A. Market Securities chief equity strategist Nisha Allicer said investors are still wary of uncertainties.

Unicapital, for its part, said investors, while relieved, are still waiting for the debt relief deal to be passed at the US Congress level and signed into legislation.

There are also concerns on a growing notion of a 25 basis rate hike by the US Fed this June as April US consumer spending jumped to 0.8 percent from 0.1 percent in March.

Unicapital said this  would pressure the Bangko Sentral ng Pilipinas to track another rate hike to maintain an interest rate differential of at least 100 bps.

“Put together, another rate hike raises the risk of a slower-than-expected GDP slowdown for the Philippines and a global recession,” Unicapital said.

This developed as the Philippine Stock Exchange (PSE) has been found by the Bureau of Internal Revenue (BIR) to have a tax deficiency of P189.2 million, inclusive of compromise penalty and interests up to Sept. 30 this year.

The amount involved “alleged deficiencies in various taxes in the calendar year 2017 including income tax, value-added tax (VAT), expanded withholding tax, among others.”

Meanwhile, Asian stocks lost early gains yesterday as relief that a possible default by the US government had been averted gave way to concern that the deal to suspend its debt ceiling was a compromise that would have negative consequences.

The package still has to be approved by the Republican-controlled House of Representatives and Democratic-controlled Senate before the debt limit is reached, likely by next Monday.

“The US had a poor resolution to the debt ceiling negotiations with still a huge increase in government debt and no real cuts to spending, but (it) has relieved pressure for now,” said James Rosenberg, an advisor at broker Ord Minnett in Sydney.