MANILA, Philippines – Selling pressures are not yet over in the already volatile local market given continuous decline in regional and global bourses.
Fund managers are still realigning funds, worried that central banks are planning to unwind stimulus programs, analysts said.
“It seems like the bears are still present. Hopefully, there will be a reversal in Dow Jones otherwise we will see some more downside given the negative sentiments overseas like in Asia Pacific,” Astro C. del Castillo, managing director of First Grade Finance Inc., said in a phone interview.
“Given what happened (on Tuesday), it seems selling is not yet over,” Del Castillo said.
The next few days will be characterized by wide range of trades, Justino Calaycay Jr., analyst at Accord Capital Securities, said.
“Investors are still very cautious of the risks presented by external factors,” Calaycay added.
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On Tuesday, the Philippine Stock Exchange index (PSEi) plunged 4.64 percent or 318.95 points to 6,556.65, the largest single day loss since slumping 5.13 percent on Sept. 23, 2011. It is also the largest one-day decline in terms of points, eclipsing the 275.22-point drop on May 30.
Foreign funds are flowing out of the Philippines amid stronger peso and potential pullout of the US Federal Reserve’s $85-billion monthly bond buying program that has been jacking up liquidity.
Locally, Philippines’ robust economic growth failed to perk up employment, with joblessness rising to 7.5 percent in April from last year’s 6.9 percent.
Calaycay said the market was also troubled by Bank of Japan’s refusal to field additional stimulus measures.
Given the market volatility, some investors sold stocks ahead of the Independence Day holiday, del Castillo said.
For the next trading sessions, the local bourse will focus on leads abroad.
“We are looking at the developments overseas,” del Castillo said.
On Tuesday, Wall Street reeled from concerns over central banks’ plans to rollback monetary stimulus measures.
Dow Jones Industrial average lost 0.8 percent or 116.57 points to 15,122.02 while the broader Standard & Poor’s 500 index slipped one percent or 16.68 points to 1,626.13.
Del Castillo said the 6,500 territory for the PSEi is a buying window “but somehow the market will continue to get sentiments from foreign fund managers.”