Local share prices tumbled again on Tuesday as Asian markets extended a global sell-off following heavy losses in New York and Europe. Markets everywhere awaited the decision on the rate hike by the US Federal Reserve, which will conclude a two-day meeting Wednesday, while fresh opinion polls fanned fears that Britain will vote to leave the European Union in next week’s referendum.
The Philippine Stock Exchange Index (PSEi) fell 1.25 percent or 94.28 points to close the at 7,460.12, while the broader All Shares declined 1.16 percent or 52.38 points to end at 4, 455.98.
Tokyo stocks ended down 1 percent—following a 3.5 percent loss Monday. Sydney was down more than 2 percent, Seoul down 0.4 percent and Hong Kong down 0.6 percent. But Shanghai closed 0.3 percent higher after losing more than 3 percent in the previous two sessions.
Commenting on the decline of PSEi, Victor Benavidez, the general manager of Alakor Securities Corp., said that the stock market badly needed a correction after nearly reaching the 7, 800-mark.
The correction, he said, has long been anticipated. “Reality has now set in, the market has been excessively overbought,” he explained.
He also pointed out two other factors. Among them, the Federal Open Market Committee (FOMC) meeting [due to take place in Manila onTuesday night]has sent the investors to the sidelines. “Also, the Brexit vote is looming and the decision there could likewise dampen the global economic outlook.”
Benavidez also said that the PSEi’s PE ratio at 18-19 is relatively expensive, which does not provide for any incentives for the investors to buy as against its regional peers.
Considering that the total market turnover was low at P6.09 billion, the sell off was not heavy though 134 issues declined, 36 remained unchanged and only 48 advanced.
All sub-indices were in negative territory led by holding firms with -2.02 percent, while the mining and oil sector had the lowest decrease of 0.007 percent.
Across the world, a further sign of the sense of panic, the yield on German 10-year sovereign bonds—or bunds—which are considered ultra-safe investments, said the French news agency, AFP, fell into negative territory for the first time in history.
With policy meetings of the US and Japanese central banks this week, investors were cautious, analysts said, while Chinese traders are waiting to see if index compiler MSCI decides to include Shanghai in its global benchmarks list. While the Fed is not expected to hike interest rates for several months, investors hope it will give some guidance on monetary policy. Opinion is divided on whether the Bank of Japan will add to its stimulus when it finishes its own gathering Thursday.