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By: Likha C. Cuevas-Miel Reporter
AMID widening risk aversion,
foreign investors have pulled their money out of the local stock
market in the first five months this year, reversing last year’s
exuberant buying of shares of listed companies.
Based on data from the Philippine
Stock Exchange, foreign money fled the country as shown by the
P18.8-billion worth of net foreign selling from January to May. This
was a huge turnaround from the P46.56 billion in net foreign buying
during the same period last year.
Bangko Sentral ng Pilipinas (BSP)
Deputy Gov. Diwa C. Guinigundo said risk aversion among foreign
investors propelled fund managers to sell down their holdings in the
country as the US subprime mortgage crisis deepened. From January to
May 18, the BSP recorded a net outflow of $95 million.
In January, the BSP saw “hot
money” amounting to $236.96 million leaving the country for the
biggest sell down to date. The following month, $370.87 million
entered the country but investors started selling again in March as
net outflows reached $197 million. A month later, another $49.8
million worth of portfolio investments left.
This ties up with the PSE data
showing the largest selling in January at P11.9 billion, of which
P1.4 billion bailed out in January 17 alone.
“Since October [last year], the
outlook on equities was bearish. In January, they continued selling
(which) is an indication that the prospects for 2008 are not
good,” Jose L. Vistan of AB Capital Securities told The Manila
Times.
The sell down caused the peso to
weaken against the dollar, as portfolio investment inflows are a
major boost to the local currency. The peso, which held its ground
in the first two months this year due to the dollar’s weakness,
has since fallen, ending Wednesday at 44.430 against the greenback.
The buying spree in the first few
months last year was spurred by the generally optimistic environment
as the domestic economy expanded amid benign interest rates and
healthy corporate earnings.
“However, there was already
warnings of a sub prime [meltdown] but [investors] chose to ignore
it [since] the warning was not loud enough,” Vistan said.
Ric Puig of ATR KimEng Securities
said that foreign fund managers might have embarked on a selling
program during the period to give returns to their clients. He
didn’t rule out general risk aversion, as investors tried to
minimize their losses from emerging markets like the Philippines.
Puig however said that trading
volumes have already steadied, which is a sign that financial
markets have calmed down. Last year, trading volume hit an average
of P6 billion, a far cry from the current P1.5 billion to P2.5
billion, he added.
On Wednesday, share prices closed
down 2.5 percent due to continued concerns about inflation and
weakness in the US economy, dealers said.
The composite index fell 66.67
points to 2,579.28 points. The all-share index fell 1.67 percent to
1,639.08 points.
Only 23 stocks advanced compared
with 87 decliners and 44 unchanged. Turnover fell to P2.797 billion
compared with P4.25 billion in the previous trading day.
The peso slipped to 44.43 to the
dollar, from 44.425 the day before.
“Inflation is still a major
concern even though oil prices have fallen slightly,” said Rommel
Macapagal of Westlink Global Equities Inc.
“The past few weeks, we have
been looking for directions and the direction we got was the big
drop on Friday in the US market,” he said.
“The next support level is
2,550. Hopefully some bargain hunting could come in and lift us
above the 2,600 level,” he said.
Telecom giant Philippine Long
Distance Telephone Co. fell 4.1 percent to P2,335. Top conglomerate
Ayala Corp. dropped 4.9 percent to P290. Bank of the Philippine
Islands fell 1.01 percent to P49.
San Miguel Corp. saw its A
shares, available only to Filipinos, fall 2.4 percent to P40.50
while its B shares, which are available to foreigners, were
unchanged at P41.
--With AFP
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