Stocks sustain free fall, close below 8,000

MANILA, Philippines — The stock market went into a tailspin yesterday, continuing Tuesday’s free fall as it remains on a major correction mode.

The benchmark Philippine Stock Exchange index (PSEi) closed below the 8,000 mark for the first time this year on a host of factors such as the lack of market catalysts, under-performing regional markets, inflation concerns, and as market correction from recent highs continues.

The PSEi ended at 7,909.07, down 150.53 points or 1.86 percent while the broader All Shares index fell to 59.43 points or 1.22 percent to finish at 4,789.06.

The sectoral indexes closed mostly in the red as well except for the mining and oil and services counters.

Yesterday’s index level was the lowest since August last year, said Lexter Azurin, senior equity analyst at AB Capital. Net foreign selling was at P1.5 billion, bringing year-to-date net foreign selling to P27.7 billion.

The market’s decline also came ahead of the US Federal Reserve meeting slated tonight and the Bangko Sentral ng Pilipinas’ own policy rate setting meeting today (March 22).

Noel Medina, research and finance analyst at HDI Securities, said the market may stay bearish until the Lenten break.

“Market plunged to its lowest level since the start of the year as the hunt for yield pushed investors to dump Philippine stocks in search of other markets with higher upside potential. We can expect selective buying by bargain hunters but the general market direction could remain bearish until the Lenten break,” he said.

Ramon Kabigting, head of research at Papa Securities, said the PSEi fell under all the weight of foreign selling, breaking below the 8,000 level.

“Markets in Asia likewise closed lower as investors await the results of the two-day policy meeting of the US Federal Reserve, as well as the BSP’s monetary meeting,” he said.

For specific issues, index heavyweights SM, Ayala Land and BPI dragged the index down the most as they fell two percent, three percent and 3.5 percent, respectively.

Juan Barredo of COL Financial, meanwhile, said the critical support break translates to another round of selling.

He said the critical support break seen again from the PSEi puts the market back into a “very defensive mode.”

“Such slipperiness exclaims the need to spot out lower support structures and we do so by looking at next Fibonacci estimates, then if need be, widening it to their relevant five-year range patterns lows,” he said.

Thus, he said, the look at the five-year patterns of the PSEi explains the current vulnerability.

In contrast, other Asian markets advanced yesterday ahead of the US Federal Reserve’s first meeting since the appointment of its new chair, Jerome Powell.

Hong Kong’s Hang Seng index outperformed the region, up 1.2 percent to 31,414.52. China’s Shanghai Composite Index gained 0.5 percent to 3,306.09 and South Korea’s Kospi added 0.1 percent to 2,487.60. Australia’s S&P/ASX 200 advanced 0.2 percent to 5,949.50.

Stocks in Taiwan and other Southeast Asia bourses were mostly higher, while Japan was closed for a holiday.

Meanwhile, US stock indexes finished mostly higher on Tuesday. The S&P 500 index rose 0.1 percent to 2,716.94. The Dow Jones industrial average gained 0.5 percent to 24,727.27. The Nasdaq composite rose 0.3 percent to 7,364.30. The Russell 2000 index of smaller-company stocks dipped 0.16 points to 1,570.41.