Local shares decline on geopolitical tensions

SHARES failed to sustain their gains on Monday as geopolitical issues caused investors to be more cautious.

The 30-member Philippine Stock Exchange index (PSEi) fell 41.92 points or 0.53% to close at 7,797.87 yesterday, while the broader all shares index fell 22.21 points or 0.47% to end 4,633.33.

“The PSEi ended lower today on muted trading which tells us that investors have not fully come back into the market. Recent geopolitical tensions are keeping investors cautious which is to be expected,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in an e-mail on Monday.

However, he noted that the index made a 90-point recovery as it made its way to the 7,700-level in the morning session.

“This tells us that investors that are currently in the market remain somewhat optimistic that our market’s fundamentals remain intact,” he said.

The US and Iran have been throwing threats at each other after the latter’s military commander Qassem Soleimani was killed following an air raid by Washington last Friday. This pushed investors to move to safer assets, like gold, which fuelled an increase in commodity’s price.

Calls for retaliation have been growing as thousands of Iranians gather in the capital and pay respects to the military leader.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan shared the same sentiment, adding that weak US manufacturing data also affected local trading.

“With oil and gold higher on geopolitical risk, and the US manufacturing weakest in a decade, it was no surprise that the Philippine shares slide along with other regional markets,” he said in a text message on Monday.

The Institute of Supply Management’s US manufacturing purchasing managers’ index was reported to be at 47.2, the lowest since June 2009. This compared to the forecasted 49, and November’s data at 48.1. Note that a number below 50 means a contraction.

The Dow Jones Industrial fell 233.92 points or 0.81% to 28,634.88, the S&P 500 index declined 23 points or 0.71% to 3,234.85, while the Nasdaq Composite dropped 71.42 points or 0.79% to 9,020.77.

Back home, sub-sectors fell except mining and oil, which gained 27.40 points or 0.34% to end at 8,048.16.

Property dropped 50.62 points or 1.21% to 4,123.05; industrials fell 93.74 points or 0.96% to 9,590.40; financials declined 9.25 points or 0.50% to 1,835.23; services went down 4.19 points or 0.27% to 1,543.08; and holding firms gave up 4.65 points or 0.06% to 7,627.07.

Value turnover was at P4.10 billion on Monday with 664.04 million issues, down from the previous session’s 659.20 million issues valued at P5.60 billion.

Stocks that fell outnumbered those that gained, 114 to 80, while 45 issues closed unchanged.

Net outflows on Monday totalled P303.30 million, higher than the previous session’s net outflows worth P157.88 million. — V.M.P. Galang with Reuters