Stock market down over 2% as peso falls

The stock market fell by over 2 percent on Wednesday with investors waiting for the results of a US Federal Reserve policy meeting said to have been spooked by the peso’s breaching P53:$1.

The benchmark Philippine Stock Exchange (PSEi) dropped by as much as 2.43 percent in morning trade before trimming its losses to close at 7,602.98, down 2.17 percent or 168 points from Monday.

The wider All Shares fell by 1.60 percent or 75.19 points to finish at 4,629.35.

Philippine financial markets were closed on Tuesday for the Independence Day holiday.

Philstocks Financial, Inc. senior equity analyst Justino Calaycay Jr. said the market was hit by the peso’s drop to P53.23 to the dollar — a new 12-year low and down 28 centavos from Monday.

“The weakening of the peso may continue to hurt some companies that have foreign-denominated debts in their books. While it makes local assets more attractive … the question on if the peso would trade lower is one thing that is keeping investors … quite wary…,” Calaycay said.

Papa Securities Corp. trader Gio Perez echoed the view, saying the “index’s weakness drew from the negative sentiment brought by the peso depreciating to a new 2018 high”.

Calaycay said the expected announcement of a Fed rate hike also contributed to the market’s decline as the US now appeared more attractive to investors.

Higher interest rates are “drawing some funds away from the emerging markets like the Philippines…,” Calaycay said.

Luis Limlingan, managing director at Regina Capital Development Corp., said investors were also concerned over the number of times the Fed would increase rates this year.

“Many are split whether this will occur three times or four times. With that added speculation, the peso slid further, making the local market even less attractive, hence prompting the massive exodus today,” he said.

Most regional markets were in the red on Wednesday. Shanghai fell by 0.97 percent, Hong Kong dropped 1.22 percent and Seoul dipped 0.05 percent. Singapore also declined by 1.09 percent and Thailand was down 0.39 percent.

Only Japan’s Nikkei registered gains with 0.38 percent.

In the US, the Dow Jones dipped 0.01 percent while the tech-heavy Nasdaq gained 0.57 percent to a new high on Tuesday.

Back in Manila, all sectoral indices recorded losses with holding firms down the most by 3.27 percent.

Over 814 million issues valued at P7.16 billion were traded.

Losers led winners, 127 to 66, while 47 issues were unchanged.

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