Stock market drops on foreign pressure

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The Philippine benchmark stock index fell hard on Monday, to 5,900 points, but analysts remained optimistic, attributing the drop to foreign selling and correction.
The pressure from the foreign front was triggered by news that the Federal Reserve will start easing its bond-buying program and may end it in 2014.

Hans Sicat, president of the Philippine Stock Exchange, said the market “may have lost ground in the past weeks” but it is merely a product of “overreaction to global developments.”

“Investors reallocating back to developed markets is not exactly accurate, with real movements going from the equities market into cash in a period of high volatility . . .
Looking at the bigger picture, the recent index setback is not equivalent to degrading the strong fundamentals,” he said.

Harry Liu, president of Summit Securities, said that the continued drop of the index should not be worrisome, because it went up in the past weeks as there was no other good platform for investments.

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“The index is in oversold condition and is undergoing the correction stage. But now it is correcting, people are in panic,” he said.

“I think the market should just digest first all the negative and see what happens,” Liu added.

He said that “some potential rallies in the market” are expected by the end of the week, and that support levels will stay at the 5,800- to 5,900-point level.

“Short-term to medium-term rally is needed to consolidate, so that the long-term will be looking well because there is no change in the fundamentals,” Liu said.

Astro del Castillo, First Grade Finance managing director, admitted that there is foreign pressure and “poor sentiment in global markets.”

“Negative sentiment is up in the global markets including the local markets. There are no incentives to really perk us up,” del Castillo said.
He predicted the market will be recover slightly by the end of the week.

The Philippine stock exchange index (PSEi) fell on Monday with a 3.41-percent decrease to 5,971.05, or a loss of 211.12 points, while the broader all-shares was down by 3.52 percent to 3,686.58, or 134.43 points.

Financials dipped by 4.69 percent, or 75.27 points to 1,531.09, while mining and oil came in second, registering a 4-percent decline, or 536.16 points to 12,873.44.

Industrials went down by 319.70 points, or 3.41 percent to 9,066.05, while holding firms also erased 220.05 points, or 3.97 percent to 5,322.47.

Property also slumped by 3.72 percent, or 91.02 points to 2,357.20, while services plummeted by 2.26 percent to 42.41 points to 1,830.59.

All of the most active stocks traded except Abolitz Power Corp., which stayed neutral, registered a decrease in prices. These include Philippine Long Distance Telephone Co., Metropolitan Bank and Trust Co., and Ayala Land Inc., among others.

Decliners beat advancers, 165 to 17, while the unchanged remained at 34.

“We believe our listed companies will remain resilient and will continue to find ways to take advantage of the favorable local macroeconomic environment,” Sicat said.

The PSEi fell sharply on Friday, erasing 144.50 points, or 2.28 percent to 6,182.17, while the wider all-shares index dropped by 98.64 points, or 2.52 percent to 3,821.01

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