Friday marks second straight weekly fall ahead of PSEi rebalancing

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WEAKNESS returned to Philippine equities on Friday — marking the second straight weekly fall — as traders adjusted portfolios ahead of the main index’s rebalancing on Monday, as the ongoing Sino-US trade row weighed on investors’ minds amid a lack of more compelling leads at home and as foreigners snapped back to selling mode.

The Philippine Stock Exchange index (PSEi) dropped 82.36 points or 1.03% to finish 7,908.89 — down 2.01% on the week — while the broader all-shares index gave up 28.32 points or 0.58% to end 4,823.32.

RCBC Securities, Inc. noted in a Stock Market Weekend Recap prepared by analyst Fiorenzo D. De Jesus that PSEi joined a regional downturn as “foreigners turned net sellers”, unloading a net P489.937 million compared to Thursday’s P251.895-million net purchases.

For AAA Southeast Equities President William Matthew M. Cabangon, “[a] large part of the moves happened at the close, and this can be attributed to the rebalancing of the PSEi, which takes effect on Monday.”

“Funds are reallocating their assets according to the new weightings all at the same time, exaggerating the moves of the index,” Mr. Cabangon explained in a mobile phone message.

Mr. de Jesus noted that trades of Bloomberry Resorts Corp. — whose stock price surged by 7.62% to P13 apiece and which replaces Petron Corp., which ended down 1.35% at P6.60 each, at PSEi on Monday — “accounted for P1.5 billion value turnover”.

“As funds portion more of their portfolio into BLOOM, they naturally sell the other index stocks in order to rebalance,” AAA’s Mr. Cabangon explained.

“We don’t see today’s -1% move in the PSEi as a reason to worry. It is just rebalancing.”

Timson Securities, Inc. Trader Jervin S. De Celis noted in a separate text message that “Our index closed in the negative territory today as foreign investors led the selloff of their positions in index stocks”.

“This negative sentiment in the PSE trailed the movement of our neighboring countries as China and US are reported far from reaching a deal, urging President (Donald) Trump to reconsider the deadline on March 1”.

Two key Wall Street indices ended Thursday down — the Dow Jones Industrial Average by 0.41%, the S&P 500 by 0.27% — while the Nasdaq Composite edged up 0.09%.

Most major Asian indices followed suit on Friday, with Japan’s Nikkei 225 and TOPIX dropping 1.13% and 0.79%, respectively, and the Shanghai SE Composite, Hong Kong’s Hang Seng and South Korea’s KOSPI giving up 1.37%, 1.87% and 1.34%, respectively.

At home, only two of the six sectoral indices ended with gains on Friday: property by 6.93 points or 0.17% to 4,036.7 and holding firms by 9.52 points or 0.12 to 7,901.93.

The rest retreated: financials by 48.71 points or 2.65% to 1,786.39, services by 21.92 points or 1.37% to 1,568.54, industrials by 91.59 points or 0.79% to 11,457.29 and mining & oil by 23.28 points or 0.27% to 8,492.91.

Stocks that declined outnumbered those that gained 127 to 83, while 46 others ended flat.

Friday saw 2.814 billion shares worth P16.391 billion change hands, compared to Thursday’s 3.792 billion worth P5.112 billion.

“The top market drag was BDO Unibank, Inc. which tumbled [by 4.98% to P133.60 apiece] following a P5.3-billion placement at P133.00 apiece. BDO’s parent, SM Investments Corp. also pulled back [by 2.02% to P970 each]. Together, BDO and SM accounted for a total of 50.41 points of the PSEi’s losses,” RCBC Securities’ Mr. De Jesus noted.

Friday’s list of 20 most active stocks showed only five that gained. Besides Bloomberry, the others were: Ayala Corp. (3.78% to P961 apiece), Universal Robina Corp. (1.53% to P146), Aboitiz Equity Ventures, Inc. (5.52% to P66) and Vista Land & Lifescapes, Inc. (26.98% to P8 each).

SM Prime Holdings, Inc. and Alliance Global Group, Inc. ended flat at P39.40 and P13.86 apiece, respectively. — J. C. Lim