Roundup: Philippine stocks close lower as investors dump their shares

MANILA, Oct 29, 2009 (Xinhua via COMTEX) -- PSKXF | Quote | Chart | News | PowerRating -- The Philippine market nearly wiped out the gains it made the previous weeks after investors dumped their shares on Thursday following the Dow Jones' more than 100 points decline the previous day.

The bellwether Philippine Stock Exchange index suffered its biggest decline for the month after it retreated by 1.57 percent or 45.88 points to 2,862.33. The all share index was also down by 1.5 percent or 27.62 points to 1,806.32.

All six counters finished in the negative territory, led by the property index which fell by 3.54 percent or 38.29 points to 1,041. 32.

Trading was within average where some 1.35 billion shares valuing 3.31 billion pesos (69.8 million U.S. dollars) were exchanged. Foreign investors continue to be net sellers at 496 million pesos (10.4 million U.S. dollars).

Market breadth remains negative with the 108 losers greatly outnumbering the 21 issues that gained. A total of 42 stocks meanwhile were unchanged.

"U.S. markets were weak last night and this gave investors jitters. The local market started the day weak and stayed weak throughout (trading session)," Prince A. Yeung of local brokerage AB Capital Securities, Inc. said in his daily stock market comment.

The analyst said concerns about the U.S. economy sent the local benchmark falling to its third straight decline. Investors, who were very cautious to begin with, are starting to get spooked by the performance of the U.S. market which dropped by over 100 points in three of its last four trading days, Yeung said.

"At the start of the week, the drop of the U.S. market did not greatly affect the local stock market. Investors, however, could not keep ignoring the fact that the Dow Jones is now below the 10, 000 level by over 200 points," Yeung explained.

Lower home sales recorded for the month of September sent investors -- who are worried about the pace of the U.S. economic recovery -- pocketing their gains on Wednesday. Blue chip-heavy Dow Jones industrial average lost 1.21 percent or 119.48 points to 9,762.69. The Standard and Poor's 500 index and technology-heavy the Nasdaq composite index also closed lower.

"Several factors conspired to push the U.S. markets lower last night. Chief among them is the concern that the economy isn't recovering yet. The worst may be over but there aren't any strong signs yet that the economy is making a big push," Yeung said.

Meanwhile, the same concerns over the health of the local economy hound investors especially with the government's continuous revision of the country's budget deficit which is now projected to hit 300 billion pesos this year.

And with the upcoming long weekend, Yeung said it will be no surprise if the local market fall again tomorrow as technical indicators show that the local market still has some room to move lower.

"The 2,900 was broken today but the next support is at 2,840. Given the trend the U.S. markets are following the past days, the main index is seen to move lower towards the 2,840 support tomorrow," Yeung said.

Investors, he said, will not want to hold on to too many positions as the long weekend reduces their ability to react swiftly if the U.S. markets continue their declines. Yeung said investors can just hope that the U.S. will report a better third quarter gross domestic product growth tonight as this can halt the foreign market's decline.

"A (negative) report however will only exacerbate the downward trend of (both markets). (And while) corporate earnings continue to pour in, the state of the overall U.S. economy -- the biggest in the world -- is of larger importance (for investors)," Yeung said.

The analyst however said a drop towards the 2,840 should be seen as an opportunity for investors to buy stocks at better prices.

Stocks in the 30-company index failed to elude the carnage.

Among the biggest losers include Ayala Land, Inc. -- Philippines' largest property developer -- and Henry Sy-led Banco de Oro Unibank, Inc. -- the country's largest lender -- which each lost more than four percent of their value.

Likewise, Philippine's largest power distributor Manila Electric Co. was down by 4.12 percent to settle at 186 pesos (3.92 U.S. dollars), while heavyweight Philippine Long Distance Telephone Co. shed 0.19 percent to 2,565 pesos (54.12 U.S. dollars) .

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