PSEi declines on fears of US growth slowdown

By Denise A. Valdez, Reporter

THE MAIN INDEX slumped on Monday as investors were cautious amid fears of a slowdown in the world’s largest economy, which boosted bets of another rate cut by the US Federal Reserve.

The bellwether Philippine Stock Exchange index (PSEi) slid 0.27% or 21.38 points to close at 7,683.22 on Monday, as the broader all-shares index also went down 0.2% or 9.43 points to 4,666.17.

“Philippine shares began the week on a slightly negative note, with fears of a recession lingering and enough evidence of a slowing economy to maintain market expectations for another Federal Reserve interest rate cut in late October,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

The sentiment on another rate cut comes even as Federal Reserve Bank of Kansas City President Esther L. George said there is no need for another lowering of interest rates, insisting the US economy is “in a good place” in a speech on Sunday.

For Papa Securities Corp. Sales Associate Gabriel Jose F. Perez, the decline in the PSEi also reflects the investors’ focus on the listing of Axelum Resources Corp. (AXLM).

The initial public offering of the coconut products manufacturer was initially expected to drive excitement among retail investors, but its shares went down 6.2% or 31 centavos at the market’s close on its debut.

“It was a quiet day for the PSEi as all eyes were on Axelum’s extremely poor debut, as the stock had fallen by as much as 16% at its intraday low of P4.19, before only being bought up at the close to end at P4.69,” Mr. Perez said in an e-mail.

“AXLM shares fell more than 6% as investors preferred to remain in cash in the meantime. Though the prospects remain sound for the company, investors have been selling the market in general, and the company may have been the result of collateral damage,” Regina Capital’s Mr. Limlingan said.

Three sectoral indices ended in the red on Monday, led by financials which slipped 0.86% or 15.59 points to 1,790. It was followed by holding firms which fell 0.62% or 47.33 points to 7,504.25, and industrials which decreased 0.15% or 16.37 points to 10,460.89.

Gainers were the mining and oil sub-sector which rose 1.58% or 140.15 points to 8,983.22, property which increased 0.59% or 23.65 points to 4,034.55 and services which rose 0.38% or 5.74 points to 1,516.38.

Value turnover was at P5.84 billion with 712.03 million issues changing hands, slightly higher than Friday’s P5.08 billion

Decliners outpaced advancers, 97 to 86, while 57 names were unchanged.

Papa Securities’ Mr. Perez said for the coming days, investors are expected to continue reacting to the movement of the US market, especially with the country’s trade talks with China scheduled to resume on Thursday.