Stocks fell for a third day, tracking the overall downturn in emerging markets amid indications of a potential rate hike in the US and volatility in the world oil and commodities markets.
The Philippine Stock Exchange index, the 30-company benchmark, shed 75 points, or 1 percent, to close at 7,557.34 Tuesday. It also reduced total gains this year to 8.7 percent.
The heavier index, representing all shares, also tumbled 40 points, or 0.9 percent, to settle at 4,495.94, on a value turnover of P7.8 billion. Losers outnumbered gainers, 147 to 51, while 40 issues were unchanged.
Five of the 20 most active stocks ended in the green, led by Nickel Asia Corp. which climbed 2.7 percent to P6.78 and Aboitiz Equity Ventures Inc. which advanced 2.3 percent to P78.80.
Analysts denied that the continuous outflow of hot money from the equities market and the fall of the peso against the US dollar were due to President Rodrigo Duterte’s tough rhetorics.
BDO Capital and Investments Corp. president Eduardo Francisco said in an interview at the sidelines of the Philippine Investment Forum hosted by CFA Institute that other markets in the region were also experiencing foreign selling because of global developments.
“I don’t agree that it is because of how our president talks. There are many factors,” Francisco said.
BPI Securities chief executive and managing director Michaelangelo Oyson said the market’s decline and the outflow for foreign funds was caused by the impending US interest rate hike.
“This is just a reversal because the Fed is sort of starting to signal that at some point it will raise interest rates. The rhetoric of President Duterte may have an impact but this stage is very much driven by the Fed,” Oyson said.
“We have been experiencing net foreign selling in the market in the past weeks but numbers show that this has slowed down following the recent meeting of the US Federal Reserve. Perhaps it is also an indication of fund managers locking in gains, as the PSEi has delivered double digit returns since the start of the year. Our economic fundamentals remain strong and this should continue to help corporate performance moving forward,” said PSE president and chief executive Hans Sicat.
Meanwhile, financial markets cheered Hillary Clinton’s performance in the first US presidential debate Tuesday, with stocks and high-risk currencies staging a “relief rally” as investors hailed her as the victor over Republican rival Donald Trump.
Key Asian bourses got a bounce as a confident Clinton bested her rival in the 90-minute showdown, some reversing earlier declines.
Tokyo closed 0.8 percent up, a dramatic volte-face from its 0.9 percent drop at the open, while Sydney also trimmed early losses.
Hong Kong opened up 0.5 percent but was more than 1 percent higher in the afternoon, while Seoul, Bangkok and Singapore were also up.
“US futures have moved ahead as the debate unravelled, and I think that is one of the factors” for Asian markets erasing losses, Michael McCarthy, a chief market strategist at CMC Markets told Bloomberg News.
“In policy terms, no doubt to Clinton; in emotional and tone terms, Clinton is also ahead at this stage. She is winning on both counts would be my current assessment.”
On forex markets, the safe-haven yen dropped, while emerging-market and other currencies surged as traders moved back into riskier assets.
The Mexican peso rebounded off a record low, rocketing nearly two percent to 19.5047 against the US dollar.
The unit had slumped ahead of the debate as the prospect of a Trump presidency fanned concerns about the Republican candidate’s pledge to renegotiate the North American Free Trade Agreement if he wins.
“The peso, Canadian dollar… and Australian dollar are all surging — very much a relief rally in risk assets,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, according to Bloomberg.
“In FX markets, the most obvious trade to anticipate a Trump presidency is to short the peso.”
Angus Nicholson, a Melbourne-based market analyst at IG Ltd. agreed that the market swing was possibly a reflection of Clinton doing well.
“Trump is largely regarded as a market negative and certainly him doing quite poorly in the debate would reassure a lot of investors. But it’s early days,” he told Bloomberg.
Oil reversed the Monday’s gains, with eyes on a producers’ meeting in Algeria.
Members of the Organization of Petroleum Exporting Countries will meet Wednesday with key producer Russia, on the sidelines of the International Energy Forum. With AFP, Bloomberg