PHILIPPINE shares retreated on Tuesday as investors quickly pocketed previous gains in reaction to news that July inflation has hit its highest level in nearly three years.
Although Wall Street’s overnight recovery and some bargain-hunting sent the benchmark index back to the 7,000-mark in early trade, the momentum was not sustained and shares fell toward the 6,900-level near the close of trading.
The Philippine Stock Exchange index (PSEi) was down 24.37 points or 0.35 percent at 6,974.00 points, off a high of 7,000.36, while the wider All Shares index dipped 5.32 points or 0.13 percent to 4,171.14.
Consumer prices rose 4.9 percent in July, its fastest rate since October 2011, data from the Philippine Statistics Authority showed on Tuesday. The July figure was also significantly higher than the 4.4 percent inflation recorded in June.
Sentiment took a hit from the higher inflation result even after National Economic and Development Authority gave reassurances that the July rate was still within the state-run Development Budget Coordination Committee’s inflation target of 3.0 to 5.0 percent for this year.
April Lynn Tan, assistant vice president and head of research at COL Financial Group Inc., said that the inflation number coupled with profit-taking pulled down the benchmark index.
“It could be partly because of [investors]taking profits from yesterday’s gains. And the higher inflation rates for July. It raises concerns,” Tan said.
“Second-quarter earnings will determine whether or not [the market will be]aggressive and also, the month of August as Ghost Month will be a factor, at least for the retail businesses. They will postpone actions until September,” she said.
The Chinese consider the “Ghost Month” an unlucky period to start a new business or investment. Since it also coincides with the annual summer break for many Western fund managers, it is characterized by lean trading volumes in global stock markets.
Industrials and mining and oil were the only gainers among the indices.
Industrials went up 22.35 points or 0.21 percent to 10,694.79, while mining and oil advanced 231.755 points or 1.35 percent or to 17,357.08.
Among the decliners, financials were down10.40 points or 0.63 percent at 1,640.58, while holding firms slipped 8.85 points or 0.14 percent to 6,252.02.
Services fell 8.48 points or 0.40 percent to 2,132.36, while property lost 28.87 points or 1.09 percent to 2,614.91.
Shares of Emperador Inc. and Alliance Global Group Inc. were actively traded but ended unchanged. The rest of the top 10 most actively traded stocks included three losers and five advancers.
Bloomberry Resorts Corp. slumped 4.68 percent or 56 centavos to P11.40 per share; Ayala Land Inc. went down 2.35 percent or 75 centavos to P31.20 apiece; and BDO Unibank Inc. lost 0.22 percent or 20 centavos to P90.80 each.
PLDT, which released positive first-half earnings, was among the day’s top gainers, with its shares rising 0.45 percent or P14 to P3,150. The other top gainers were SM Investments Corp. (up 0.38 percent or P3 to P800 per share) and Manila Electric Company (up 3.29 percent or P8.60 to P270 each).
Advancers still outnumbered decliners, 89 to 79, while 51 shares were unchanged. Volume traded reached 1.53 billion shares, valued at P9.379 billion.
On Monday, the benchmark index opened the market with gains, breaching the 6,900-level as soon as the trading sessions started and recording an intra-day high of 7,005.71. It closed however to 6,998.37, with 104.1-point gain or 1.51 percent, while the All Shares index added 52.77 points or 1.28 percent to 4,176.46.