JITTERS over a US interest rate hike in December continued to plague global markets including the Philippines where a sell-off downed the bellwether PSEi to the 7,400 level.
Intra-day, the PSEi touched 7,399.57 points before closing with a loss of 1.21 percent or 91 points at 7,429.82. The broader All Shares index went down 1.34 percent or 60.19 points at 4,429.84.
Lexter Azurin, assistant vice president and research head of Unicapital Securities Inc., said the sell-off was triggered by bets on a Fed rate hike.
“The market is bracing for a rate hike in the US. It seems like it’s going to happen in December,” Azurin said.
Online brokerage firm COL Financial Group Inc. noted the recent statements of President Rodrigo Duterte may have a negative impact on investor sentiment, but could be cited at the major reason why share prices and value of the peso are on the wane.
“Many attribute the weak performance of the stock market and the depreciation of the peso to President Duterte’s ongoing war against drugs and his negative reaction to criticism against his campaign,” COL said in a market note entitled “COLing the Shots: Is the President to blame for our weak financial markets?”
“Although President Duterte’s actions are negatively affecting investor sentiment, it is not fair to blame him completely for the stock market and the peso’s weakness in our opinion,” according to COL.
Investors have factored in the valuation of the PSEi at high price-to-earnings (PE) ratio of 18.7 times, which is more expensive than the regional average and above its 10-year average of 15.7 times.
“Finally, there seems to be an ongoing rotation into Chinese stocks as the Chinese economy is showing signs of stabilizing,” the online brokerage added.
Azurin said the pessimism hounding the market was not centered on the President’s words but on the uncertainty of economic policies.
“On the local front, it’s really because of uncertainty. We need more clarity in terms of economic policies. Investors are really concerned on where the economy is headed for,” Azurin noted.
More than 1.06 billion shares were traded, valued at P8.44 billion. Decliners outnumbered advancers, 159 to 32, while 43 stocks were unchanged.
On Tuesday, the main PSE index decreased by 0.18 percent or 13.89 points to 7,520.82, while the All Shares slightly increased by 0.008 percent or 0.34 points to 4,490.03.