NEWS of US President Obama’s decision to permit airstrikes on Iraqi militants sent local equity investors scurrying for the exits, sending the local market sharply lower at the end of the week’s trade.
The Philippine Stock Exchange index (PSEi) fell 74.87 points, or 1.08 percent to close at 6,880.34, while the broader All Shares index declined 0.90 percent or 37.40 points to 4,129.40.
Analysts said concerns over Ukraine also weighed on trading earlier, before news of Obama’s authorization of the use of US air power against militants in Iraq created further market jitters. The PSEi was also dragged by global markets, with the US indices all ending lower overnight.
Overnight, the Dow Jones Industrial Average lost 75.07 points, the tech-heavy Nasdaq index erased 20.08 points, while the S&P 500 registered a 10.67-point drop, dragging down markets all over the world.
Justino Calaycay Jr. of Accord Capital Equities Corp. and Joyce Anne Ramos of AB Capital Securities, Inc. both said investors opted to cash in on gains due to the slight market increase on Thursday, factoring in the Obama permission for airstrikes.
“It is expected for the market to go sideways on Obama’s decision to strike in Iraq, and raised inflation and interest rates are also dragging the market amid the good earnings of the companies,” Calaycay said.
Ramos said investors pulled out some assets as “sentiment is not so good regarding the Obama permission to strike Iraq.”
Rafael Supangco, Angping & Associates Securities research head, said that in addition to the Obama decision, there was also a slight negative effect from the announcement of Meralco’s P0.31 per kilowatt hour rate hike for the month of August.
Although there were indications at midday that Thursday’s unexpected decline in the peso was driving the local bourse downward, Supangco dismissed this as a factor, explaining that it was not certain whether the equities slide is “a cause or an effect of the weakening of the peso.”
The Philippine peso fell to its lowest level in three months this week, hitting 44.08 to the dollar at the close of Thursday’s trade from 43.57 previously, and losing another 5 centavos in heavy Friday trading to P44.13. The peso was also the biggest loser among Asian currencies, along with the Thai baht.
“I think the market was all around Obama approving airstrikes in Iraq, that’s why investors became jittery. It is mainly geopolitical concerns,” Supangco said.
All the sectoral indices end in the red Friday, with holding firms leading the way with a 1.56 percent slump or 98.09 points to close at 6,176.85. Properties registered a 1.41 percent slide or 37.07 points to 2,583.25; industrials lost 86.65 points or 0.81 percent to 10,556.06; mining and oil lost 140.17 points or 0.80 percent to 17,367.95; services were off 8.66 points or 0.41 percent to 2,087.39; while financials shed 3.21 points or 0.20 percent to end the week at 1,637.62.
The top ten active companies were all in the red, except Robinsons Retail Holdings Inc., which did not move at P65 per share.
The active decliners during Friday’s trading session were shares of PLDT, Ayala Land Inc., SM Investments Corp., Alliance Global Group Inc., BDO Unibank Inc., SM Prime Holdings Inc., Universal Robina Corp., Manila Electric Company and Globe Telecom Inc.
Losers outnumbered gainers by more than four to one, 126 to 40, while 52 shares were unchanged. A total of 1.199 billion shares were traded, amounting to P7.163 billion.
Looking ahead to next week, all three analysts see sideways movement in the short-term market with geopolitical concerns likely to be stabilized by sound corporate earnings reports. Resistance level is seen at 7,000 and support at 6,820.
The long-term outlook is still strong and positive toward the end of the year, they added.
On Thursday, the PSEi ended flat, with just a modest 0.09 percent increase or 6.24 points to 6,955.21, while All Shares index closed higher by 0.21 percent or 8.64 points at 4,166.50.