The Philippine stock index crashed back to the 6,700-point mark on Monday following the fall of major Asian markets and Dow Jones’ retreat.
Summit Securities Inc. President Harry Liu attributed the drop of the Philippine Stock Exchange index (PSEi) to the shocks caused by the United States and Japan markets, as well as the continuing depreciation of the peso.
He however pointed out that the local market is on a medium-term correction stage and on “support level as of the moment.”
Francisco Liboro, president of the PCCI Securities, expects the market to fall further in the coming days.
“We see support trying to hold at 6,800. Then 6,500 is the next target. Even if it hits 6,500, I won’t call it a bear market. It will still be just a correction—a much needed correction,” he said.
Liboro added that the declines are not to be feared, because a correction “is healthy” for the market.
After a slight recovery last week, the PSEi ended at 6,763.38, registering a 3.68-percent fall, or by 258.57 points, the lowest since 2011. The broader all-shares index dipped as well by 2.68 percent, or 115.16 points to 4,176.
All counters ended in the red side, with property diving by 4.96 percent, or 143.12 points to 2,742.77. Mining and oil decreased by 3.72 percent, or 643.19 points to 16,636.94.
Financials registered a decline of 3.80 percent, or 68.28 points to 1,728.730, while the industrial counter dipped 290.34 points, or 2.74 percent to 10,320.83.
Holding firms went down by 2.88 percent, or 179.28 points to 6,039.35, and services closed with a 2.82-percent slide, or 58.08 points to 2,004.45.
Only GT Capital Holdings Inc. and Puregold Price Club Inc. registered an increase in prices among the 10 most actively traded shares.
The most active losers were SM Investments Corp., Metropolitan Bank and Trust Co., SM Prime Holdings Inc., Ayala Land Inc. (ALI), Alliance Global Group Inc., Philippine Long Distance Telephone Co., Ayala Corp. and LT Group Inc.
Meanwhile, losers outnumbered gainers by a mile, 138 to 33, while 33 issues were unchanged.
ALI shares dropped also from the Serendra blast, which Liu said was “a short-term factor but not a significant one.”
He added that Monday’s index figures do not mean that the local market is falling, and that its long-term market performance will be okay if index is kept at 6,800 points.
“The long-term [market performance]is still intact as long as it is in 6,800,” he added.
Japan, dow jones drop
Among the major markets abroad, Tokyo and New York greatly influenced the mood toward local equities.
Tokyo, which fell more than 5 percent last week, was down 512.72 points at 13,261.82, continuing volatile trading that has seen a series of sharp drops.
“A major factor behind today’s big decline was Friday’s fall on Wall Street,” Kenzaburo Suwa, strategist with Okasan Securities, told Agence France-Presse.
“On top of that, Japanese shares are still in the middle of adjustment following the recent surge,” he added.
Some analysts have been predicting a sharp correction in the Nikkei, which had surged about 80 percent over the past six months to climb above the 15,000-point level before the recent downturn.
Seoul also fell 0.57 percent or 11.48 points to close at 1,989.57, and Sydney dropped 0.78 percent or 38.3 points to end at 4,888.3.
In afternoon trade, Shanghai lost earlier gains to drop 0.21 percent and Hong Kong was trading flat, edging down 0.02 percent.
The falls came after conflicting manufacturing data from China, with HSBC saying on Monday that activity fell to an eight-month low in May.
The British banking giant’s final purchasing managers’ index (PMI) reading for May came in at 49.2, worse than the preliminary 49.6 announced on May 23.
A reading below 50 indicates contraction in the sector.
The result was in sharp contrast to the Chinese government’s PMI result for May, which came in at 50.8, better than April’s 50.6.
US stocks also tumbled on Friday, accelerating their losses after a flurry of mixed indicators sparked volatile trade, with consumer spending down but shoppers’ confidence climbing.
The Dow Jones Industrial Average shed 1.36 percent to 15,115.57, with the “fear index” measuring market volatility finishing at its highest level since mid-April.
The Commerce Department reported consumer spending dropped by 0.2 percent in April, but there was also a jump in the Chicago area PMI index and a positive outlook in the University of Michigan consumer confidence barometer.
US manufacturing data is due out later in the day, and a stronger-than-forecast reading could stoke fears the Federal Reserve will soon taper off massive stimulus measures.
Another indicator of health in the world’s largest economy, US non-farm payrolls data for May, is due out Friday.
WITH A REPORT FROM AFP