Weak earnings, pre-GDP caution, weigh on stocks

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Shares fell across the board on Tuesday, reflecting reaction to the latest first-quarter corporate earnings results, which came in lower than expected, and caution ahead of the release later in the week of data on the country’s economic performance for the quarter.

Hovering around 7,600 points during most of the day, the Philippine Stock Exchange index (PSEi) pared its losses to 0.43 percent or 33.03 points to close at 7,728.50. The wider All Shares index fell 0.68 percent or 30.43 points to 4,436.39.

Miguel Agarao, investment analyst at Wealth Securities Inc., said “lackluster earnings” by companies for the first quarter of the year largely influenced the day’s trade, leading to extensive selling by foreign investors.

“The market was quite bad. It’s because of lackluster earnings that were below forecasts. Foreign selling continued, which has been evident since mid-April. Earnings didn’t quite meet the expectations. The market is also tentative and can go lower before the GDP [gross domestic product]results [are released]on Thursday,” Agarao said in a telephone interview.


Market weakness is expected to persist in the next few days, and may drive the benchmark index down to the 7,400-point level possibly next week. Agarao said major support may be found between 7,400 and 7,500 points for the short term.

Bryan Gomez, co-head of investments at Citisecurities Inc. also sees market support at the 7,400 to 7,500 levels.

“We might see the index go [down]to 7,400 to 7,500 as funds are most likely adjusting to a possible hike in the US interest rate this September, or by the fourth quarter of this year,” Gomez said.

“Our eyes are peeled on this as rising rates may have a negative effect on stock prices in the short term. Prices may be able to adjust to this in three to four months. Until then, we’re keeping our powder dry,” he added.

The mining and oil sector posted the biggest index loss of 1.23 percent or 182.60 points.

Top declining stocks were Megaworld Corp., Metropolitan Bank and Trust Company, Universal Robina Corp., BDO Unibank Inc., SM Prime Holdings Inc., and Philippine Long Distance Telephone Company.

GT Capital Holdings Inc. and Ayala Corp. managed to post some gains among the actively traded stocks, while Globe Telecom Inc. and Emperador Inc. ended flat.

Total trade volume stood at 1.13 billion shares, valued at P9.13 billion. There were 161 decliners and 31 advancers, while 37 issues finished unchanged.

On Monday, the PSEi eased 0.62 percent or 48.64 points to close at 7,761.53, while All Shares index slipped 0.59 percent or 26.72 points to 4,466.82.

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