Overseas bearish performance drags down Philippine shares

16:42, July 02, 2010      

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The bearish sentiment of investors overseas continue to take its toll on the Philippine market which retreated for the second time this week.

The bellwether Philippine Stock Exchange index fell 0.73 percent or 24.28 points to settle at 3,290.98 on Friday, while the broader all-share index lost 0.88 percent of its value or 18.71 points to 2,096.89.

Trading volume reached 1.43 billion shares valued at 2.63 billion pesos (56.46 million U.S. dollars) with foreign sellers beating buyers with 5.57 million pesos (119,000 U.S. dollars).

All six counters closed lower, with 86 issues losing their value and only 20 stocks rallied. A total of 66 shares meanwhile were unchanged.

"The market registered a negative performance mainly because of (Thursday and Friday's) sell-off after investors followed the bearish sentiment in equities markets abroad as worries about the global economic recovery weakened risk appetite," DBP-Daiwa Securities, Inc. said.

After holding on to the 3,300 level for almost a week, the composite index lost 1.83 percent of its value this week to close at 3,290.98. This is mostly in consistent with the performance of the Dow Jones industrial average index which dropped to its eight-month low of 9,732.53 on Friday.

Surprisingly, most Asian equities managed to claw back some of its losses and were trading in the positive on Friday. As of Friday afternoon, the Shanghai composite index, Japan's Nikkei index and Strait Times were all in the green turf.

"(The Philippine market) held strong to its gains until Tuesday (or) before the inauguration of Philippine President Benigno Aquino III as local stocks benefited from quarter-end window dressing where foreign investors were net buyers," DBP-Daiwa Securities, Inc. said.

Nonetheless, as early as Tuesday, the brokerage said there were already hints of profit-taking at the latter part of the session especially after the market reached the critical resistance levels of 3,360 to 3,370 range.

"The market valuations have become unattractive. Price-to- earning (PER) ratio is already at 15.1x, or near the MSCI Asia Pacific ex-Japan PER of 17.1x," DBP-Daiwa Securities said.

Given the bearish performance of both the local and U.S. markets, the brokerage house said the market will be facing another volatile session next week.

"The Philippine stock market has been rocked by major changes in the investment climate over the last three weeks, including the transition of Philippine government to the Aquino administration from the Arroyo administration, the drop of U.S. market by 6.47 percent since the recent high of 10,450.64 levels and the continuing escalation of Greek crisis and unease regarding the plunging euro," DBP-Daiwa Securities said.

"These setbacks will be the major concerns of the market that are seen to influence the investment stance of the investors at the start of the second half of this year," it added.

Hardly surprising is the mixed performance of the stocks in the 30-company index. Metropolitan Bank & Trust Co. and rival the Bank of the Philippine Islands finished lower after being the investors ' top picks last week.

Heavyweight Philippine Long Distance Telephone Co. meanwhile closed higher after being sold down heavily.

The increase in the number of tourists visiting the country will be beneficial to the property sector specially those real estate firms that are engaged in the leisure segments, it said.

Source: Xinhua


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