Stocks, peso drop on 1st trading day of 2020

By Denise A. Valdez
Reporter

THE Philippine Stock Exchange index (PSEi) started the year on a dour note as the benchmark index slipped, while the peso weakened against the US dollar on the first trading day of 2020.

The Philippine Stock Exchange index (PSEi) shed 72.73 points or 0.93% to close at 7,742.53 on Thursday, as investors continued to be spooked by increasing regulatory risks.

Despite the downbeat start, analysts still expect a “good market” throughout the year.

“In 2020, we’re expecting a good market. First and foremost, because of the accommodative government policies,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a phone call, referring to low interest rates and the expected on-time passage of the national budget.

“Last year, we started off with high rates. This year, we’re starting with a loose monetary policy,” he said. “Given the low interest rates and the national budget expected to be signed on time, we expect this to help in boosting the overall economy, and in turn, to trickle down to the market.”

This is in line with the bourse operator’s expectation that the main index will “soar to new highs” in 2020.

“There’s a lot to look forward to and accomplish this 2020. This will only be possible if we all work together and collaborate on initiatives that will help make PSE more competitive in the region,” PSE Chairman Jose T. Pardo was quoted in a statement as saying.

BPI Securities Corp. has previously pegged the PSEi to reach as high as 9,000 in 2020, driven by economic growth, especially in the banking, property and consumer sectors.

Aside from economic fundamentals, Mr. Tantiangco of Philstocks said listed companies’ fundamentals are likewise doing well.

“The fact that we still have a lot of stocks that are at bargain levels, particularly index stocks, gives a good opportunity for investors to hunt for bargains,” he said.

However, regulatory risks continue to hound the stock market, as the government continues its attacks against water concessionaires — listed Manila Water Co., Inc. and Maynilad Water Services, Inc., whose key shareholders include listed Metro Pacific Investments Corp. and DMCI Holdings, Inc.

Shares in Manila Water lost 66 centavos or 6.37% to P9.70 apiece on Thursday while shares in MPIC shed 12 centavos or 3.45% to P3.36 each. On the other hand, DMCI shares inched up 1.36% to P6.70 each.

Mr. Tantiangco noted the regulatory uncertainty initially affected water stocks, but the negative sentiment appears to be affecting other utility firms.

“That will be one of the challenges that are expected to weigh on the market,” he said.

ABS-CBN Corp., whose franchise expires in March and is at risk of non-renewal due to a rift with President Rodrigo R. Duterte, is also taking a beating at the stock market. Its shares lost 10 centavos or 0.63% to P15.70 each on Thursday.

But Regina Capital Development Corp. Head of Sales Luis A. Limlingan said investor sentiment on specific stocks may still change when Mr. Duterte addresses the public on Monday. Until then, most of the risks are external: the volatile price of oil, the outcome of the trade negotiations between United States and China, the US election in November and any weather disturbances that may affect the output of listed firms.

The stock market slump on Thursday hurt the Philippine peso, which weakened to P50.685 per dollar against P50.635 per dollar last Friday. But year-on-year, the peso grew stronger by P1.83 from its Jan. 2, 2018 close of P52.515.

Although the peso’s close on Thursday is “a good start” given that it is still within its typical range from the past days, a trader said in a phone call that continued uncertainty with regard to the US-China trade war and the profit-taking from the market may also be to blame for the slight weakness in the local unit.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also said that despite the depreciation, the peso-dollar exchange rate on Thursday is still among its “strongest in the past two weeks and in nearly two years”.

“Peso was also weaker today after the net foreign selling at the local stock market at -$16.9 million, after the previous trading day’s -$16.1 million…amid regulatory risks on water utilities and TV network recently,” he said in a text message. — with Luz Wendy T. Noble