Shares plunge ahead of central bank meetings

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By Arra B. Francia, Reporter

SHARES fell on Wednesday as investors remained on the sidelines ahead of various central bank meetings overseas and the peso’s decline to a new 12-year low.

The 30-member Philippine Stock Exchange index (PSEi) gave up 2.16% or 168.32 points to 7,602.98, declining steeply compared to overseas counterparts. The all-shares index also went down 1.59% or 75.19 points to 4,629.35.

“I think it’s risk-off sentiment ahead of major central banks’ meetings, Fed (US Federal Reserve), ECB (European Central Bank), and BoJ (Bank of Japan), and expected non-trading day on Friday,” IB Gimenez Securities, Inc. Research Head Joylin F. Telagen said via text.

The US Federal Open Market Committee (FOMC) is holding a two-day policy meeting. The ECB will meet on June 14, while the BoJ is also set to review policy from June 14 to 15.

Timson Securities, Inc. Trader and Marketing Head Mark Levinson R. Koa also noted that the market dropped due to fears of another rate hike by the FOMC, noting the larger net outflows seen Wednesday, June 13.

The market recorded its 20th day of net foreign selling on Wednesday, with net outflows swelling to P1.51 billion, much higher than the P282.33 million seen last Monday.

“The weakness of the Philippine peso (now trading at its lowest levels in more than 10 years) is also to blame as foreigners are seen to dispose more Philippine assets due to the local currency’s decline to avoid forex losses,” Mr. Koa said in a separate message.

The peso weakened to a fresh 12-year low of P53.23 versus the dollar on Wednesday.

Meanwhile, Wall Street ended mixed overnight, with the Dow Jones Industrial Average flat with a loss of 1.58 points or 0.01% to 25,320.73. The S&P 500 index went up 0.17% or 4.85 points to 2,786.85, while the Nasdaq Composite index added 0.57% or 43.87 points to 7,703.79.

Most Asian markets also logged lower finishes on Wednesday, as investors prepared for the results of a series of meetings of the United States Federal Reserve. MSCI’s broadest index of Asia-Pacific shares excluding Japan dropped 0.50%.

Back home, all sectoral indices bled Wednesday, June 13, with holding firms leading the decline with a drop of 3.27% or 253.91 points to 7,506.32. Mining and oil shed 1.65% or 171.13 points to 10,150.38, followed by property which fell 1.52% or 57.47 points to 3,711.64.

Industrials went down 1.41% or 153.94 points to 10,755.96; financials slumped 1.04% or 20.07 points to 1,903.66; and services dipped 0.78% or 11.81 points to 1,494.97.

Some 814.89 million issues switched hands, resulting in a value turnover of P7.17 billion. This marks a recovery from the P4-billion turnover seen last Monday, before the market took a break for the Independence Day holiday.

Decliners prevailed for the day at 127 issues versus 66 names that advanced and the 47 that remained flat.