Local shares drop on negative US leads, weak China inflation


Local stocks fell by over 1 percent on Wednesday as investors digested overnight declines in US markets and fresh news underscoring a slowdown in China.

The Philippine Stock Exchange index (PSEi) fell back into 6,900 territory, losing 88.67 points or 1.26 percent to 6,924.77, while the All Shares index also decreased by 1.006 percent or 40.54 points to 3,989.49.

Astro del Castillo, managing director of First Grade Finance Inc., said the local market was pulled down by weak Chinese consumer and producer prices.

“The market was down still on the jitters from China, from the economic data that went out today which supported the slowdown of China. There is a possible impact in their economy which is affecting global markets,” del Castillo said.

China’s September consumer price index rose by 1.6 percent, lower than the 1.8 percent consensus forecast. The producer price index – a measure of wholesale prices – hit the expected contraction of 5.9 percent. It was the 43rd straight month of declines as Chinese manufacturers struggled to address weak demand.

Overnight, meanwhile, Wall Street closed negative as the Dow slipped by 0.29 percent or 49.97 points to 17,081.89, the S&P 500 dropped by 0.68 percent or 13.77 points to 2,003.69 and Nasdaq registered 0.87 percent decline or 42.03 points to 4,796.61.

Despite Wednesday turnout, del Castillo said the market would be pumped up by third quarter corporate earnings — is expected to be released starting end-October to November.

“We’re bracing for the third quarter corporate earnings to boost the market. As companies hit the third quarter releases, hopefully these earnings results will reverse the situation. Starting next week, the earnings might give more impetus to reallly boost the market,” del
Castillo said.

Asked if investors were still worried over a possible US rate hike, he said “The US Fed is really more [worried]on Chinese [developments]. Slowdown in Chinese economy is preventing the Fed from raising rates.”

With the market having risen past 7,100 last week, del Castillo said there was “no reason” for yearend result below 7,000.

“[C]ompany earnings continue to be positive and our economic data remains optimistic, inflation manageable and OFW [overseas Filipino workers]remittances and the BPO [business process outsourcing sector]continue to drive GDP [gross domestic product].”

First half GDP growth was 5.3% in the first semester, below the government’s 7 percent to 8 percent target.

Analysts expect the full-year result to fall at or just above 6 percent, citing factors such a weak global demand.

All of the bourse’s sub-indices declined, led by mining and oil which lost 373.81 points or 3.28 percent.

Among the most active stocks, only Universal Robina Corp. and Jollibee Foods Corp. were advancers while the rest declined, including SM Prime Holdings Inc., International Container Terminal Services Inc., Philippine Long Distance Telephone Company, SM Investments Corp., Metropolitan Bank and Trust Company, Ayala Land Inc., Alliance Global Group Inc., and D&L Industries Inc.

Losers outpaced gainers, 112 to 64, while those unchanged numbered 45 issues. The total volume traded was 1.198 billion shares, amounting to P5.2 billion.


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