Market drops; MRC, Jollibee up

Stocks fell for a third day, dragging the benchmark index below the 7,200-point market for the first time in nearly three months, as investors stayed on the sidelines amid lingering concerns over the rising inflation rate.

The Philippine Stock Exchange index, the 30-company benchmark, fell 86 points, or 1.2 percent, to close at 7,134.73 Thursday amid thin trading.

The heavier index, representing all shares, shed 42 points, or 1 percent, to settle at 4,411.96, on a value turnover of P4.6 billion.  Losers outnumbered gainers, 113 to 82, while 33 issues were unchanged.

Seven of the 20 most actives stocks ended in the green, led by MRC Allied Inc. which jumped 7.5 percent to P0.72 and Jollibee Foods Corp. which rose 2.6 percent to P271.

Meanwhile, the latest rally in most Asian markets stumbled Thursday, though emerging market currencies held gains after Beijing’s pledge not to weaponise the yuan in its trade standoff with the United States.

Regional markets have been on the rise this week after the latest tit-for-tat tariffs from China and the US were considered lenient and allowed for talks, with observers suggesting a further escalation was unlikely in the near term.

And while China on Wednesday hit back at Donald Trump’s accusation that it is using the trade conflict to affect November’s key mid-term elections, the generally upbeat sentiment continued into Thursday morning.

However, investors began to step back as the day wore on. Tokyo ended barely moved, Shanghai was slightly lower and Hong Kong and Singapore also drifted in afternoon trade.

Seoul put on 0.7 percent and Wellington edged up 0.2 percent following data showing the New Zealand economy grew at its fastest in two years during the second quarter.

Sydney, Taipei and Manila dropped but Jakarta jumped 0.9 percent.

“With both the US and China likely to resume negotiations, expectations are still there for a resolution before President Trump deems it necessary to double down on tariffs,” said Stephen Innes, head of Asia-Pacific trade at Oanda.

Wall Street had provided a positive lead with all three main indexes hovering near record highs.

However, while equities ran out of steam embattled emerging market (EM) currencies were enjoying some much-needed buying support, having been beaten down by trade war fears in recent months, as well as concerns of a spillover from crises in Argentina, South Africa, and Turkey.

Analysts said that as well as the easing trade tensions, a key boost for the currencies was Premier Li Keqiang’s statement that China would not devalue the yuan to fend off the effects of any tariffs.

“China will never rely on the depreciation of the renminbi (yuan) to stimulate exports because a one-way depreciation of the renminbi exchange rate will have more disadvantages than advantages,” he told an economic forum.

“The premier’s comments are encouraging as they indicate that China won’t actively use its currency as a weapon in its trade scuffle with the US,” said Rodrigo Catril, senior forex strategist at National Australia Bank.

However, he added: “As we have seen in recent months this doesn’t necessarily mean that China will prevent the yuan from weakening if market forces push the currency lower.” 

A devaluation in 2015 sent world markets and EM currencies plunging.

On Thursday Indonesia’s rupiah, the Malaysian ringgit and the Thai baht all added 0.3 percent, while the South Korean won was 0.1 percent up.

Turkey’s lira climbed 0.9 percent, while the South African rand and Russian ruble were 0.3 percent higher. With AFP

Topics: Philippine Stock Exchange , Philippine Stock Exchange , Stephen Innes , National Australia Bank , Rodrigo Catril
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