Stock Market

By Krista A. M. Montealegre, Senior Reporter

Signs of China slowdown, US rate fears sour mood

Posted on November 11, 2015

STOCKS further faltered yesterday, with the Philippine Stock Exchange index (PSEi) barely clinging to the 7,000 level after straying into 6,000 territory for the first time since Oct. 15 as investors anticipated the first US interest rate hike in nearly a decade that could come next month and digested recent additional China data showing the world’s second biggest economy slowing.

The bellwether PSEi gave up 70.08 points or 0.99% to close at 7,000.11, stretching its losing streak to a fifth session, while the broader all-shares index pulled back by 38.21 points or 0.93% to end at 4,040.86.

“It was a similar narrative across Asia as sentiments and outlook were dragged by more evidence of a weak China economy and, ironically, a US that has gained stronger traction,” Justino B. Calaycay, Jr., Philstocks Financial, Inc. analyst, said in a report.

Asian markets fell yesterday following the release of a slew of Chinese data that raised concerns over the outlook on the world’s second largest economy. Inflation eased for the second straight month in October, while the producer price index contracted for a 44th month in a row.

The fresh evidence of a slowdown in China came after last week’s stronger-than-expected US payrolls data that increased the chances that the Federal Reserve would increase rates in its December meeting.

“At this level, we are trading at 18 times P/E (price-to-earnings ratio) for this year, still one of the more expensive ones in the region,” Lexter L. Azurin, head of research at Unicapital Securities, Inc., said in a phone interview.

“It’s hard to justify valuations right now with the latest batch of earnings reports. There are no surprises on the upside, adding to negative sentiment.”

All six counters ended yesterday with losses, with five sectoral indices retreating by more than 1%. Financials dropped 21.42 points or 1.35% to finish 1,556.04; property tumbled 39.44 points or 1.31% to 2,967.81; services fell 20.06 points or 1.25% to 1,575.02; mining and oil declined by 128.57 points or 1.14% to 11,137.11; industrial shed 124.43 points or 1.08% to 11,311.03; and holdings firm slipped by 53.56 points or 0.80% to end 6,578.23.

Value turnover nearly doubled to P6.38 billion after 533.58 million shares changed hands, from P3.73 billion in the prior session.

There were about three losers for every issue that gained, while 48 others were unchanged.

International investors were in selling mood yesterday, as evidenced by net sales of P1.03 billion that were a reversal of Monday’s P65.92-million net foreign purchases.

The market is ripe for some recovery, one analyst said. “The sustainability of this rebound, however, rests on how the rest of the earnings cycle comes out… and the third-quarter gross domestic product expected towards the final week of the month,” Philstocks’ Mr. Calaycay said.