Stocks settle lower on global worries

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Slumping markets in Europe and the US and oil prices at 5-year lows weighed on the local bourse for the second day of a storm-shortened week.

The benchmark Philippine Stock Exchange index (PSEi) closed Wednesday’s trade down 8.79 points or 0.12 percent at 7,175.08.

The broader All Shares index likewise lost 4.67 points or 0.11 percent to close at 4,220.89.

“The PSEI forayed for a while off the opening bell into positive territory, raising hopes for a deviant mood from the rest of Asia. Indexes from Japan to India were in the red tracking an overnight drop in US and European equities,” Justino Calaycay of Accord Capital said.


“US stocks fell overnight while oil tumbled to a 5-year low. Hours earlier, the closing bell sounded in Europe with all indexes in the red. Chinese trade data missed forecast highlighting the challenge facing the world’s second largest economy,” he added.

Calaycay pointed out, however, that while the past three days have not been encouraging—seeming putting a cloud over Santa’s path—the bigger picture diffuses part of the negativity. At this point, the PSEI is up 21.97 percent year-to date, nearly 6 times the return posted over the same period last year, and much bigger than the 1.33 percent return for the full-year 2013.

“Truth be told, expectations were more bullish at the beginning of 2013 than it was this year. Maybe if not for the Fed tapering fears beginning in May and Yolanda towards the end of last year, the result could’ve been far different. But knowing the things we didn’t know then—the Fed eventually began to taper $10 billion per month and Yolanda’s impact showing up on disappointing GDP numbers, not to mention higher inflation—sentiments were able to focus on the more important aspects of stock valuations— earnings,” he said.

“The PSEI is most highly correlated with corporate earnings (0.88) than it is with any of the economic metrics—inflation (0.22) and GDP (negative). Thus at the end of the day, it is how that corporate performs, particularly how much cash flow it is able to generate for its shareholders that is the bottom line. Unfortunately, even earnings have disappointed. Yet hope springs eternal for the final quarter of the year,” he added.

Among the sectoral indices, only two inched up, financials by 0.40 percent or 6.71 points to 1,676.67, and industrials by 0.04 percent or 4.29 points to 11, 837.77.

Elsewhere in the market, holding firms were down by 0.34 percent or 21.56 points at 6,323.51, services lost 0.36 percent or 7.45 points to 2,077.71, mining and oil slumped by 0.74 percent or 155.75 points to 15,470.60, and property slipped by 0.16 percent or 4.37 points to 2,802.09.

Only BDO Unibank Inc. ended flat among the most actively traded, while SM Prime Holdings Inc., Energy Development Corporation, Ayala Corporation, and GT Capital Holdings Inc. were top gainers.

Active decliners included PLDT, Universal Robina Corp., Ayala Land Inc., JG Summit Holdings, Inc. and SM Investments Corporation.

Decliners outnumbered advancers 109 to 64, while 52 shares were unchanged. Total shares traded reached 1.97 billion shares valued at P8.693 billion.

Trading resumed yesterday after suspension on Monday due to Typhoon Ruby. The Philippine Stock Exchange index (PSEi) ended 46.69 points or 0.65 percent lower at 7,183.87, while the All Shares index lost 24.44 points or 0.58 percent to 4,225.56.

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