Philippines Shares Continue to Slide

By Cris Larano | Source:

Philippine shares dropped anew Monday, with Friday’s losses on Wall Street providing foreign funds with an excuse to book profits from the local stock market’s recent run-up.

The bellwether PSEi closed at 6763.38, down 3.7%, nearly matching the 3.8% drop on Thursday when the market fell the most–percentage-wise–since Sept. 26, 2011. The index made up some ground on Friday by closing up 1%. Even after the recent losses, though, the PSEi is up 16% for the year.

“We just following the U.S. market and we are falling much more because we are more expensive. We have traded at an average 14.2 times earnings in the past seven years. This year, we are at 21 times and even at 6500, the index will still be at 18 times,” said Luz Lorenzo, market strategist at Maybank ATR Kim Eng. “Our recommendation is to buy on weakness and if the index slides to 6500, buy more aggressively.”

Volume was heavy and decliners swamped losers 138 to 33.

The decline was led by SM Investments, down 3.5% to PHP1,080; Metropolitan Bank & Trust, down 4.1% to PHP121.10; and SM Prime Holdings, down 6.5% to PHP18.24.

Between January and May, foreign funds have been net buyers of PHP66.67 billion worth of Philippine equities, including net purchases of PHP6.83 billion last week. Traders note, however, that foreign funds accounted for 35% of daily trading volume last week, down from an average of 50% for the first five months of the year, an indication of their steady exit.

Grace Cerdena, head of operations at stock brokerage, said local buyers are still on the sidelines, waiting for the selling to abate. She said investors are watching for comments and action from the U.S. Federal Reserve, particularly on when it plans to end its bond-buying program.

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