The local stock market continued its slump on Wednesday, dropping by almost two percent, mostly on negative sentiments from overseas markets.
The Philippine Stock Exchange index (PSEi) lost 1.73 percent or 115.58 points to close at 6,557.89.
The wider all-shares index likewise ended in the red with a 1.47-percent decline, or 60.87 points, to 4,067.24.
Tokyo plunged 3.83 percent, or 518.89 points, to 13,014.87—continuing a roller coaster ride that saw the Nikkei lose about 17 percent. Meanwhile, the Dow Jones Industrial Average finished down 76.49 points or 0.50 percent at 15,177.54.
Jonathan Ravelas, chief market strategist of BDO Unibank Inc., said the local stock market continued to extend its losses after Wall Street went lower.
This, according to him, is because of rising concerns that the US economy is still recovering and that the Federal Reserve may taper its asset purchases.
“Investors are solidifying their gains [those who got it early]and waiting on the sidelines for lower levels,” Ravelas said.
For the upcoming trading, the support level is at 6,500 points and if this holds, Ravelas said, a pullback to the 6,750-point to 6,850-point level could be expected.
“If 6,500 levels fail to hold the market, it may further lose towards the 6,000 level,” he said.
Astro del Castillo, First Grade Finance managing director, sees the continued selling among investors as an adjustment and realignment of portfolio. He said the same reason goes for Wall Street’s decline.
BDO Capital President Ed Francisco said the market is stabilizing, given the good values present within the Wednesday trading session.
All sectors registered losses yesterday, led by property, which dropped 3.14 percent or 84.91 points to 2,623.19, followed by holding firms which registered 2.79-percent decline, or 186.66 points to close at 5,869.66.
Mining and oil also posted significant losses, decreasing by 1.98 percent, or 327.71 points to 16,231.05, while financials fell 1.95 percent, or 32.88 points to end at 1,653.14.
Industrials fell slightly by 0.27 percent or 27.91 points to 10,239.36, while services dropped by 0.36 percent or 7.03 points to 1,935.62.
Total value turnover was at P10.35 billion.
The total number of issues that registered price dips was 114, dominating those that somehow recorded improvements, 43. Forty-one issues were unchanged.
Among the top decliners were some of the big players such as Philex Petroleum Corp., Cebu Air Inc., LT Group Inc., and Robinsons Land Corp.
On Tuesday, an overnight surge in US equities and early indications of a sustained push in European markets failed to lift confidence at the local bourse with the index dropping significantly anew.
The PSEi on Tuesday went down by 1.33 percent or 89.91 points to close at 6,673.47, following an almost 300-point decline on Monday.
Accord Capital Equities Corp. Analyst Jun Calaycay said the outlook for the domestic economy remains favorable, thus, the market’s massive meltdown could only translate to bargains.
“Thus, it is our belief that investors should refocus energies on reconfiguring their portfolios on the basis of valuations and return to the basics of investing on fundamentals and less on trading on technical indications– at least at this time of shaky confidence,” he said.
The head of the International Monetary Fund, Christine Lagarde, warned that the global economy may be slowing more than thought just over a month ago.
There are “some glimpses of more somber trends. Recent data, for example, suggest some slowdown in growth,” Lagarde said in a speech at the Brookings Institution, a Washington think tank, according to the prepared text.
The IMF managing director recalled that the Fund in April projected the global economy would grow 3.3 percent in 2013, but that she had spoken of “the fragile and uneven recovery that is taking place.”
On Tuesday, the IMF slightly lowered its growth forecast for France, a day after halving its estimate for Germany, Europe’s largest economy, to a mere 0.3 percent.
In late May, the IMF also cut its projection for China, the main engine of the world economy, to around 7.75 percent from 8.0 percent.
“We could be entering a softer patch,” Lagarde said, noting that the 17-nation eurozone, which has been in recession for six consecutive quarters, remained the main area of concern.
“Overall, the region is operating at ‘zero speed,’” she said. “Going forward, the indicators are not encouraging either.”
WITH A REPORT FROM AFP