A potential interest rate increase in the US this year spooked investors and dragged the benchmark PSEi down to 7,300 level as foreign funds exited the market—mostly from the property sector.
The PSEi lost 117.64 points or 1.58 percent to close at 7,312.18, while the wider All Shares declined by 60.24 points or 1.36 percent to 4,369.60.
“Reasons for the decline is a combined impact of the following: 1) the hawkish Fed meeting minutes released last night, indicating a potential December rate hike putting investors on risk-off mode, 2) uncertainty next month with US elections and OPEC meeting, and 3) the net foreign selling today at P750 million,” Victor Immanuel Felix, equity analyst at AB Capital Securities Inc., said in a text message.
“A breach of 7,300 opens the market toward the 7,100 levels. A successful hold above the 7,300 support level tomorrow will put the market to trade within the 7,300 to 7,500 range.
“We’ll see tomorrow if downward momentum persists or if there will be buying relief,” Felix noted.
For her part, equity analyst Joylin Telagen of IB Gimenez Securities Inc. said global uncertainties continued to encourage the sell-off as the US Federal Reserve was “looking to hike interest rates before the end of the year.”
There was also the impact of a “weaker-than-expected China exports,” she added.
“The heavy sell off was driven by the property sector, down by 4.63 percent on the concerns about the rate hike as higher rates mean tempered sales in the property sector,” Telagen said.
“Outlook for the coming days will be sideways. PSEi has broken the 7,400 support level down to 7,300. If this level holds, we might rebound back to 7,400. The downside risk is that we may see the market going down to 7,200,” she added.
All the subsectors were in the red, with the property counter leading the downtrend with a 4.63 percent plunge.
Only Security Bank Corp. and Metro Pacific Investments Corp. were in the green among the actively traded stocks. Decliners included Ayala Land Inc., Ayala Corp., PLDT Inc., SM Prime Holdings Inc., GT Capital Holdings Inc., Megaworld Corp., Metropolitan Bank and Trust Company, and SM Investments Corp.
More than 1.73 billion shares changed hands, valued at P8.77 billion. Decliners outweighed advancers, 164 to 29, while 44 issues were unchanged.
On Wednesday, the PSEi was down 1.21 percent or 91 points to 7,429.82, while the All Shares declined by 1.34 percent or 60.19 points to 4,429.84.