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PSE index drops below 7,000 on global concerns

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PHILSTAR/KRIZ JOHN ROSALES

LOCAL EQUITIES slipped, bringing the main index below the 7,000 mark on Monday, as global trade tensions continued to bring market jitters.

The bellwether Philippine Stock Exchange index (PSEi)dropped 76.32 points or 1.08% to close at 6,986.88 Monday, June 25.

The broader all-shares index likewise fell 35.65 points or 0.82% to end at 4,311.41.

Jervin S. de Celis, equity trader at Timson Securities, Inc., said the benchmark’s drop below the 7,000 level “can be an ominous sign that the index has further downside to go.”

“It’s still the same, investors are still not yet convinced to go on a buying spree in our market as trade tensions threaten the global economic growth,” Mr. De Celis said in a text message Monday, June 25.

Regina Capital Development Corp. Managing Director Luis A. Limlingan noted in a text message that the surprise decision of the People’s Bank of China to cut its reserve requirements amid the trade tension, weaker US manufacturing data and the Organization of the Petroleum Exporting Countries’ (OPEC) decision to boost output at smaller tranches, “all fuelled the sell-off.”

China’s central bank said on Sunday it would cut the amount of cash that some banks must hold as reserves by 50 basis points, releasing $108 billion in liquidity, to accelerate the pace of debt-for-equity swaps and spur lending to smaller firms.

The reserve reduction, the third by the central bank this year, had been widely anticipated by investors amid concerns over market liquidity and a potential economic drag from a trade dispute with the United States.

Meanwhile, OPEC agreed with Russia and other oil-producing allies on Saturday to raise output from July, with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers.

Back home, holding firms plunged 166.68 points or 2.38% to 6,821.70; property slid 54.44 points or 1.58% to 3,389.74; and financials shed 5.93 points or 0.33% to 1,769.56.

Meanwhile, advancers were led by mining and oil, which went up 97.85 points or 1.01% to 9,747.40; industrials added 74.31 points or 0.72% to 10,316.93; and services increased 6.50 points to 0.47% to 1,377.28.

Decliners trumped advancers, 101 to 80, while 59 issues were unchanged. A total of 715.57 million shares changed hands Monday, June 25, for a value turnover of P6.12 billion, lower than Friday’s P8.05 billion.

Foreigners continued to flee the market, with Monday’s net selling totaling P401.53 million, although lower than Friday’s P1.41-billion outflow.

Despite yesterday’s drop, Timson Securities’ Mr. De Celis said he is “a bit” expectant of a recovery happening midweek or at least before Friday as fund managers reposition their portfolios for their second-quarter performance.

Regina Capital’s Mr. Limlingan noted that the index has to close above the 7,000-point mark “because failure means we will probably test support at 6,800.” — JCL with Reuters