Stock market falls, snaps 5-day rally

The stock market slumped Tuesday on profit taking to end a five-day rally as investors fretted about the prospect of rising US borrowing costs.

The Philippine Stock Exchange Index fell 70.90 points, or 1 percent, to 6,885.36 on a value turnover of P15 billion. Losers outnumbered gainers, 135 to 75, with 38 issues unchanged.

Aboitiz Equity Ventures Inc. of the Aboitiz Group tumbled 10.6 percent to P47.50, while unit Aboitiz Power Corp. dropped 9.6 percent to P30.90.

Noodles maker Monde Nissin Corp. declined 8 percent to P18.62, while International Container Terminal Services Inc. of tycoon Enrique Razon Jr., the biggest port operator, shed 4.3 percent to P192.50.

Most Asian equity markets slipped Tuesday, with US lawmakers’ struggle to raise the debt ceiling agitating nerves on trading floors.

Fears over the possible collapse of troubled Chinese developer Evergrande have abated for now, though the crisis is being closely followed.

Meanwhile, analysts said concerns that an energy crunch in China could hit growth in the world’s number two economy were adding to the downbeat mood, with Goldman Sachs lowering its outlook for this year.

With the US economy back on track—and several Federal Reserve officials saying their goals of sustained inflation and tackling unemployment are close to being met—the US central bank is expected to begin tapering its ultra-loose monetary policy within months.

The policy committee essentially signaled such a move at its meeting last week, while a closely watched guide to its interest rate plans suggested a rate hike could even come before the end of next year.

“Central bankers have set out how they want to ‘normalize’ monetary policy for some time. That process could start soon,” Chris Iggo of AXA Investment Managers said.

“The realization of this has the potential to provoke some volatility in rates and equities.”

On Wall Street the Dow edged up but the S&P and Nasdaq fell into the red, with tech firms more susceptible to higher interest rates.

And the selling filtered through to Asia, where Tokyo, Sydney, Seoul, Singapore, Wellington, Mumbai and Taipei followed suit.

However, Hong Kong rose more than one percent, having taken a battering in recent weeks from China’s crackdown on a range of industries—particularly tech firms and Macau-based casinos—and the Evergrande crisis. Shanghai also rose.

Initial fears that the collapse of the embattled firm could spill into the global economy have eased. But there is still concern that if the issue is not handled properly the Chinese property sector, which accounts for a huge part of the economy, could take a massive hit.

The People’s Bank of China on Monday said it would ensure a “healthy property market” and protect buyers’ rights, as it looks to temper anger among investors about Evergrande failing to complete their properties, despite taking their money.

The central bank’s comments come after a tightening of rules around the real estate sector by Beijing strangled firms’ ability to invest and construct buildings, a major reason for Evergrande’s woes. With AFP