HIGH valuations and disappointment over the cancellation of a planned meeting between the US and Philippine leaders at the Asean Summit in Laos weighed on the equities market on Wednesday, with the benchmark index losing 1.3 percent at the close of trade.
The Philippine Stock Exchange index (PSEi) fell 100.08 points to 7,619.10, while the All Shares index retreated 51.49 points or 1.12 percent to 4,542.35.
RCBC Securities Research analyst Anton Alfonso said that in earlier trade, investors were disappointed over the cancelled meeting between President Rodrigo Duterte and US President Barrack Obama in Laos.
Duterte on Monday warned he would swear at Obama if the US president brought up the topic of human rights and extra judicial killings at the forum. The Obama camp later decided to cancel the meeting with Duterte.
But Luis Limlingan, managing director of Regina Capital Development Corp., said foreign net fund selling was the main drag on the local market, with foreign investors bearish over the unattractive high prices of top stocks and certain issues under the Duterte administration.
Limlingan said one concern among fund managers is how the proposed tax reforms, which are set to be submitted to Congress this month, will turn out.
The Duterte administration is set to propose four tax reform packages to Congress. These reforms will cover the personal income tax (PIT) and consumption tax; corporate income tax (CIT); property tax; and capital income tax.
These tax packages, which are aimed at supporting government programs for infrastructure and human capital, are expected to mostly burden firms engaged in food and beverage manufacture as well as real estate rather than weigh on wage earners.
Limlingan said another concern is the spread of bomb threats in the wake of the Davao bombing last Friday, and with SM malls a favorite target in the past, investors sold off SM Prime Holdings Inc. shares. The stock fell 2.86 percent on Wednesday.
“For now, I think there’s still a lot of selling pressure. But it’s no surprise if there’s bargain hunting. So far, it’s still a bit bearish,” he said, unless other news comes up to keep the market afloat. He said the next big piece of news that can affect the market is the Federal Open Market Committee meeting on September 20-21.
All of the top stocks fell on Wednesday, including Metro Pacific Investments Corp., Metropolitan Bank and Trust Company, GT Capital Holdings Inc., Megaworld Corp., Ayala Corp., Ayala Land Inc., Security Bank Corp., Universal Robina Corp., and BDO Unibank Inc.
Except for the mining and oil index, all other sectors declined led by the property sector, which dropped 2.44 percent.
A total of 2.142 billion shares worth P10.26 billion were traded on Wednesday. Decliners outnumbered advancers 125 to 65, with 43 stocks unchanged.
On Tuesday, the PSEi declined 0.58 percent or 44.87 points to 7,719.18, while the wider All Shares index also fell 0.44 percent or 20.35 points to 4,593.84.