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PSEi declines to 7,600 level on higher US yields

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PHOTO BY SANTIAGO JOSE J. ARNAIZ

THE MAIN INDEX fell back to the 7,600 level on Thursday as investors moved out of equities in favor of higher Treasury yields.

The bellwether Philippine Stock Exchange index (PSEi) plunged 2.22% or 175.44 points to close at 7,694.12.

The broader all-shares index likewise gave up 1.60% or 76.06 points to 4,678.74.

Eagle Equities, Inc. President Joseph Y. Roxas said the “weak peso and falling remittances” affected the market yesterday.

Cash remitted by overseas Filipino workers (OFW) dropped by 9.8% to $2.36 billion in March, the steepest fall seen since a 10.9% drop in April 2003.

This came after the repatriation of OFWs in Kuwait and the subsequent employment ban there, the central bank said, following the discovery of OFW Joanna D. Demafelis’ body stuffed in a freezer in an abandoned apartment last February.

Meanwhile, Regina Capital Development Corp. President Marita A. Limlingan blamed rising Treasury yields for the index’s performance.

“Foreign funds seem to lighten because treasury yields are more attractive. The 25-basis point [hike] by BSP (Bangko Sentral ng Pilipinas) did not strengthen peso and we think inflation will go higher. A peso with weakening prospects will be less attractive to investors who measure returns in dollars,” Ms. Limlingan said via text.

Net foreign outflows swelled to P1.32 billion on Thursday versus the P479.85 million recorded in the previous session.

Other analysts, meanwhile, noted that the index was due to come down given that recent drivers were non-fundamental factors.

“Since recent up-moves were largely driven by non-fundamental factors like the MSCI rebalancing, today’s close down was likely due to profit taking,” China Bank Securities Corp. Research Director Garie G. Ouano said in a separate message.

All sectoral indices ended in negative territory, with property leading the decline, closing at 3,782.79, 3.10% or 121.09 points lower. Holding firms shed 2.45% or 190.94 points to 7,585.82, while financials dropped 1.34% or 26.15 points to 1,916.80.

Services moved down 1.11% or 17.30 points to 1,532.66; industrials dropped 1.08% or 119.99 points to 10,991.67; while mining and oil decreased by 0.44% or 45.53 points to 10,208.95.

A total of 1.32 billion issues switched hands for a value turnover of P7.16 billion, up from Wednesday’s P6.38 billion. Decliners outnumbered advancers, 121 to 69, while 62 stocks ended flat.

Overseas, markets in the US were mostly in positive territory led by retail stocks. The Dow Jones Industrial Average added 0.25% or 62.52 points to 24,768.93. The S&P 500 index jumped 0.41% or 11.01 points to 2,722.46, while the Nasdaq Composite index gained 0.63% or 46.67 points to 7,398.29.

Asian stocks ended mixed as investors focused on renewed tensions between North Korea and the US. — Arra B. Francia