Stocks drop on profit taking, economic outlook

stocks drop on profit taking economic outlook - Stocks drop on profit taking, economic outlook

By Revin Mikhael D. Ochave, Reporter

SHARES ended in negative territory on Wednesday as investors booked profits and as market sentiment was affected by the revised gross domestic product (GDP) forecast of the World Bank for the Philippines.

The bellwether Philippine Stock Exchange index (PSEi) fell 101.01 points or 1.4% to end at 7,102.66 on Wednesday, while the broader all shares index dropped 32.92 points or 0.76% to close at 4,253.13.

Philstocks Financial, Inc. Research Associate Claire T. Alviar said the market ended weaker on profit taking, which was further dampened by the trading day’s net foreign selling result.

Net foreign selling on Wednesday reached P685.74 million, a turnaround from the foreign inflows worth P113.94 million seen on Monday.

“At the 7,200 level, PSEi’s price-to-earnings ratio is already at 21x which is overvalued compared with its historical average of around 18x so traders took profits already after [Tuesday]’s break,” Ms. Alviar said in a mobile phone message.

Ms. Alviar added investor sentiment was dragged by the World Bank’s revised forecast for the country’s GDP performance this year.

In its latest Philippines Economic Update released Tuesday, the World Bank once again lowered its GDP forecast for the Philippines this year to an 8.1% contraction from the 6.9% slump penciled in last October.

The government’s economic team expects GDP to shrink by 8.5-9.5% this year.

For AAA Southeast Equities, Inc. Research Head Christopher John Mangun, the bourse dropped as investors were concerned about the possible spike in local coronavirus disease 2019 (COVID-19) cases after the holiday season as a result of increased mobility and gatherings.

“Investors are not willing to pay a higher price for blue chips, at least not before the holidays. They also may want to see how well the economy performs this December before justifying a higher valuation,” Mr. Mangun said in an e-mail.

Most sectoral indices at the PSE closed in the red on Wednesday. Property declined 65.4 points or 1.8% to 3,558.60; holding firms went down 132.64 points or 1.78% to 7,313.74; services retreated 25.46 points or 1.64% to 1,522.02; and financials shrank 7.02 points or 0.47% to 1,477.88.

On the other hand, mining and oil climbed 336.38 points or 3.81% to 9,159 while industrials increased 69.48 points or 0.74% to 9,443.78.

Value turnover on Monday stood at P9.88 billion with some 99.2 billion issues switching hands, higher than the previous session’s P9.56 billion with some 45.27 billion issues.

Advancers outnumbered decliners, 132 against 117, while 27 names ended unchanged.

“We may continue to see the main index move sideways between 6,700 and 7,200 in the coming weeks,” Mr. Mangun said.

Leave a Reply

Your email address will not be published. Required fields are marked *