Yuan woes drag PSEi down to 7,400-level

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PHILIPPINE shares fell and drove the main index to the 7,400 points territory on Wednesday as the market worried about the repercussions of the move by Chinese authorities to devalue the yuan.

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The PSEi closed 0.99 percent or 75.02 points lower at 7,495.43, while the All Shares fell by 0.97 percent or 42.3 points to 4,298.55.

“The market reacted to the selloff on Wall Street that was driven by the sudden depreciation of the Chinese currency. This caused a knee-jerk reaction from investors,” Jonathan Ravelas, BDO chief market strategist, said.

The yuan, also called the renminbi, has dropped 4 percent since Tuesday to hit a four-year low on Wednesday.

Ravelas said a slight adjustment in the Chinese currency and a further decline in Philippine share prices could spark a round of bargain-hunting in the next few days.

Alexander Adrian Tiu, equity analyst at AB Capital Securities Inc., said the market “responded negatively to the Chinese yuan devaluation.”

“The economic slowdown in China is feared deeper than expected, with the industrial production data coming out lower than expected. There are also fears that exports may hurt,” Tiu said.

Tiu noted the PSEi will come under bearish pressures in the coming days, with the corporate earnings results not enough to cheer the market.

All the sectors were in the red, led by property (down 1.63 percent) and industrial (down 1.62 percent).

More than 2.74 billion shares, valued at P7.84 billion, were traded. Decliners outnumbered advancers, 114 to 44, while 55 issues traded unchanged.

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