Stocks fell for a second day, dragging the benchmark index to a nine-week low which defied the uptrend in Asian markets, on concerns over President Rodrigo Duterte’s declaration of “state of lawless violence.”
The Philippine Stock Exchange index, the 30-company benchmark, dropped 44 points, or 0.6 percent, to close at 7,719.18 Tuesday. Despite the loss, the bellwether was still up 11 percent this year.
The broader all-share index also declined 20 points, or 0.4 percent, to settle at 4,593.84, on a value turnover of P7.7 billion. Losers outnumbered gainers, 108 to 75, while 54 issues were unchanged.
Eight of the 20 most active stocks ended in the green, led by Medco Holdings Inc. which soared 22.6 percent to P1.25 and Security Bank Corp. which rose 3 percent to P226. Universal Robina Corp. gained 2.2 percent to P184.90.
NG Manila senior economist Joey Cuyegkeng said concerns over recent political developments, if unchecked, would have more profound impact on markets and the economy.
“For now, the impact is likely to be marginal and is likely to be offset with favorable macro-economic fundamentals – structural inflows, high foreign exchange reserves, strong domestic demand and monetary and fiscal leeway,” Cuyegkeng said.
Cuyegkeng said concerns on extra-judicial killings and statements that might antagonize long-time allies were also making international news which elicited growing concerns from investors.
Bangko Sentral Governor Amando Tetangco Jr. said, however, there was no negative reaction “as far as the foreign exchange market is concerned.”
“So it is externally driven at this point. Also in the equity market, there has been no major sell-off,” Tetangco said.
Meanwhile, Asian markets extended gains Tuesday on diminishing prospects of a US interest rate rise this month, while the dollar also gained against the yen after Japan’s central bank chief pledged fresh stimulus if needed.
Traders remain upbeat after data Friday showed a healthy increase in US jobs creation—indicating an improving economy—but not a strong enough figure to justify an early increase in borrowing costs.
“Monetary policy is going to remain easy around the world and that will continue to be supportive of risk assets,” James Woods, a strategist at Rivkin Securities in Sydney, told Bloomberg News.
The prospect of interest rates being kept low for the time being sent markets soaring Monday. After early profit-taking they built on those gains Tuesday.
Hong Kong added 0.4 percent in late trade while Shanghai ended 0.6 percent higher and Seoul put on 0.3 percent. Singapore surged more than one percent in the afternoon while Taipei closed up one percent.
Tokyo rose 0.3 percent as exporters were supported by the weaker yen. The dollar rose to 103.61 yen from 103.38 yen late Monday.
Adding to yen weakness were comments from Bank of Japan chief Haruhiko Kuroda, who repeated a pledge Monday of fresh stimulus if necessary and deflected talk of scaling back on its massive easing policy.
However, he gave few firm hints about the bank’s plans when it holds a two-day meeting from September 20.
On oil markets both main contracts were up after a volatile session Monday, when investors were left disappointed by a lack of action from Russia and OPEC kingpin Saudi Arabia on addressing a global supply glut. With Bloomberg, AFP