Share prices retreated below record levels on profit-taking on Wednesday, with buying interest dampened by weak economic data from China and the US and fears the market may have been overbought.
The Philippine Stock Exchange index (PSEi) index dropped to a low of 7,800 points, before bouncing slightly to close at 7,906.46, trimming its losses to 1.86 percent or 150.03 points. The wider All Shares index declined 1.85 percent or 85.03 points to 4,520.89.
The benchmark PSEi has fallen 2.72 percent in three trading days since it reached an all-time high of 8,127.48 points on Friday last week.
“We are seeing the first major profit-taking for the year for the Philippines, and at the same time digesting China’s recent announcement of slower GDP [gross domestic product]numbers,” Bryan Gomez, co-head of investments of Citisecurities Inc., said.
“In the next few days and weeks, we expect the market to continue its profit-taking,” he said.
Jonathan Ravelas, BDO chief market strategist, said “overvaluation jitters and weak sentiment overseas caused [local]investors to capitalize on their gains” in the past few record highs, stopping at this year’s 27th peak on April 10.
President Benigno Aquino 3rd was just celebrating the other day with the PSE officials and traders the market’s record-breaking performance that brought the benchmark index past the 8,000-point level for the first time on April 7.
Aquino said he was hopeful that the market would hit 9,000 to 10,000 points before he steps down from office by 2016.
AB Capital Securities Inc. investment analyst Alexander Adrian Tiu explained Wednesday’s decline: “A bearish global macro backdrop drove the index lower. China GDP for the first quarter slowed to 7 percent and Chinese industrial production grew slower than expected.”
“Meanwhile, US retail sales also came in weaker, which contributed to the PSEi’s downward movement,” he added.
The sectoral indices all ended in the red, led by a 4.13 loss in mining and oil.
All actively traded stocks fell, led by Nickel Asia Corp., which tumbled 13.64 percent. Other top decliners were Universal Robina Corp., GT Capital Holdings Inc., Megaworld Corp., Ayala Land Inc., Metropolitan Bank and Trust Company, SM Prime Holdings Inc., Energy Development Corp., Ayala Corp., Philippine Long Distance Telephone Company and Nickel Asia Corp.
Volume turnover stood at 2.28 billion, valued at P12.15 billion. Losers outnumbered gainers, 158 to 41, while 35 issues finished unchanged.
“If the 7,800 to 7,850 [range]holds, this could signal a retest of the 8,000 to 8,100 levels. Failure for the 7,800 to 7,850 levels to contain the market could call for further losses to the 7,500 levels,” Ravelas said.
On Tuesday, the PSEi closed down 16.76 points or 0.21 percent at 8,056.49, while the All Shares index shed 10.84 points or 0.23 percent to 4,605.92.