Fears of US protectionism under a Donald Trump presidency kept foreign funds streaming out of the Philippine Stock Exchange, sending share prices plummeting to nine months.
The bellwether PSEi fell by 2.53 percent or 176.33 points at 6,802.73, while the wider All Shares lost 2 percent or 84.46 points at 4,138.16. It was a nine-month low for the PSEi since it closed at 6,792.06 on February 19, 2016.
The Philippine market was the only decliner among Asian markets.
“The sell-offs from yesterday continued as foreign funds flocked to the US market, which closed in record territory, as oil prices surged 4 percent, the greenback’s rally paused and withered, and the bond market selling relented,” said Luis Limlingan, managing director of Regina Capital Development Corp.
“Strong US economic activity improved during October, further enforcing the reason for funds to pull out the Philippine market,” he said.
Limlingan explained that the US drifting away from Philippine ties under a Trump administration is disturbing
Investors were disturbed by a slowly deepening chasm between the US-Philippine relations that could hit remittances from the US and revenue from business process outsourcing which are major drivers of the Philippine output, Limlingan noted.
“Our markets have strong ties with the US, so if they pull out in terms of remittances and BPO revenues, then we may be affected,” Limlingan said.
“Also, interest rates are forecasted to be hiked soon,” he added.
The market has lost around 16 percent from the year’s high of 8,100 on the PSEi in July. This means “we are almost in bear market now,” Limlingan noted.
A bearish situation may come about once the PSEi drops another 4 percent to the 6,480 level, a scenario that can become a reality in two months, he said.
The Mining and Oil sector registered the only sectoral gains on Tuesday. The Holding Companies and the Property indices both slumped by 3.06 percent.
Alliance Global Group Inc. was the sole advancer among the heavily traded issues, with GT Capital Holdings Inc., Ayala Land Inc., SM Investments Corp. and Ayala Corp. among the biggest decliners.
Total trading volume reached more than 3.58 billion shares valued at P6.98 billion. Losers outnumbered gainers, 131 to 63, while 34 issues traded unchanged.
On Monday, the PSEi lost 88.67 points or 1.26 percent to close at 6,979.06, while the All Shares declined by 31.66 points or 0.74 percent at 4,222.62.