Equities decline as market corrects after climb

LOCAL EQUITIES dropped on Thursday along with regional markets due to rising global bond yields.

The bellwether Philippine Stock Exchange index (PSEi) gave up 1.2% or 107.04 points to finish at 8,813.25 on Thursday.

The broader all-shares index reflected this performance as it finished with a 0.83% decline or 42.76 points to 5,101.41.

“Market corrected today (Thursday). This was precipitated by the increase in international bond yields…which are rising because most markets are normalizing, they’re reducing the stimulus placed on the market,” Diversified Securities, Inc. equities trader Aniceto K. Pangan said in a phone interview yesterday.

Regina Capital Development Corp. Managing Director Luis A. Limlingan noted an accelerated rise in the yield of 10-year US treasury notes. German yields were also reported to be the highest since end-October.

“Treasuries had a bumpy ride which saw yields tick up to 2.59% before retreating back to 2.55% level,” Mr. Limlingan said.

Due to the rise in yields, the Dow Jones Industrial Average closed flat with a decrease of 0.07% or 16.67 points to 25,369.13. The S&P 500 index closed 0.11% or 3.06 points lower to 2,748.23, while the Nasdaq Composite index slipped 0.14% or 10.01 points to 7,153.57. 

Nevertheless, Diversified Securities’ Mr. Pangan noted that yesterday’s decrease is a healthy correction for the PSEi.

“We have already gained more than 5%, so it’s just rational that investors will go on profit taking. The correction is a healthy correction considering how fast the market appreciated,” he said.

The mining and oil sector was the lone sub-index that ended in positive territory, rising 0.28% or 34.19 points to 11,897.71. The rest of the counters ended in the red, with most losing more than 1% from the previous trading day. Property dropped 1.89% or 77.54 points to 4,005.12; holding firms went down 1.16% or 106.29 points to 8,989.44; and services shed 1.04% or 17.09 points to 1,618.95.

Industrials also slipped by 0.98% or 115.19 points to 11,575.95, while financials were down 0.14% or 3.25 points to 2,317.47.

A total of 919.10 million issues switched hands on Thursday. Total value turnover was at P7.74 billion, higher than Wednesday’s P6.53 billion.

Losers outpaced advancers, 120 to 88, while 54 names closed flat.

Foreign investors snapped a four-day buying streak as the market recorded a net foreign outflow of P878.96 million yesterday, against inflows of P626.45 million on Wednesday.

Most Southeast Asian stock markets also dropped on Thursday, tracking Asia and Wall Street overnight which snapped a six-day rally on investor concerns that China, the world’s biggest holder of US Treasuries, might slow or halt its bond buying.

Benchmark 10-year Treasury yields jumped to a 10-month high.

Asia shares ex-Japan were down 0.50% as of 0400 GMT. — Arra B. Francia with Reuters