Stocks end at year-low over rate hike anxieties

MANILA, Philippines — It was a bloodbath at the local stock market yesterday following a similar selloff in Wall Street.

The benchmark Philippine Stock Exchange index pulled back to its lowest level for the year, closing at 8,059.60 or a drop of 175.94 points (2.13 percent).

Similarly, the broader All Shares index was battered badly, closing at 4,848.49 or 100.31 points (2.02 percent) lower.

The rest of the counters weren’t any better, with all ending in the red and posting hefty losses.

Total value turnover reached P18.541 billion. Market breadth was negative, 176  losers to 53 gainers, while 37 issues were unchanged.

Astro del Castillo, managing director at First Grade Securities Inc., said investors are feeling the heat of inflationary risks and uncertainties abroad.

Overall, he said the market is hungry for more positive news which may be in the form of strong corporate results or positive economic data.

“It seems like Manila’s bridge keeps on falling down given the many risks emanating from overseas. Investors are playing safe and are being risk averse. Plus, there’s really not much news to push the index higher,” Del Castillo said.

As a result, he said, investors are shying away from equities going to safer havens such as bonds.

Furthermore, Del Castillo said investors are also anticipating the impact of higher interest rates and inflationary adjustments as a result of the Tax Reform for Acceleration and Inclusion Act (TRAIN), the Duterte administration’s tax reform package.

He said those looking for the positive impact of the TRAIN would have to wait for six to nine months and would in the meantime, only see the inflationary impact for now.

For specific issues, Ayala Corp. shed 7.23 percent after Mitsubishi Corp., which owns 10 percent of the conglomerate, sold 6.2 million shares at a 4.6 to 7.5 percent discount, according to a report by IFR. It was the stock’s biggest intraday drop since August 2015.

“Ayala Corp. led the index’s decline as it fell 7.2 percent on the back of the highest net foreign selling figure of the day of P489.2 million following a private placement,” said Gio

Perez, a trader at Papa Securities.

The local stock market also took the cue from the US, said Luis Limlingan, managing director at Regina Capital.

He said all three US benchmarks ended lower on Monday amid heightened investor anxiety over the US Federal Reserve’s upcoming meeting today.

Many expect the US central  bank to raise the target range for the funds rate by 25 basis points while the Bangko Sentral ng Pilipinas (BSP) is expected to keep rates steady.