Local shares to track Wall St. amid lack of leads

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TRADING at the Philippine Stock Exchange was suspended on Tuesday as clearing and settlement operations were halted after the government closed its offices because of bad weather.

Yesterday would have been the first trading day after the United Nations (UN) voted on new sanctions against North Korea, which was short of an oil embargo. Analysts have been saying the actions of Pyongyang have left investors nervous in the past days.

“These may put pressure on North Korea to ease tensions and may calm markets, including (the) Philippines,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.

Bloomberg reported on Tuesday that the UN Security Council approved new sanctions aimed at punishing North Korea for its latest missile and nuclear tests after the US dropped key demands in order to win support from Russia and China.

The 15-member Security Council passed the resolution unanimously on Monday after a week of talks that began when Kim Jong Un’s regime tested its most powerful nuclear bomb.

The resolution seeks to cut imports of refined petroleum products to 2 million barrels a year, ban textile exports and strengthen inspections of ships that are believed to be carrying cargo in breach of sanctions.

“I think it will be a nonevent for Philippine stocks. I expect our market to be strong on the back of a rebound in US stocks as Hurricane Irma weakened by the time it hit Florida,” said Miguel A. Agarao, vice-president of Philequity Management, Inc.

2TradeAsia, online arm of F. Yap Securities, Inc., earlier said investors would focus on the UN members’ vote on whether to support the sanctions against Pyongyang after its “unabated” missile tests.

On Monday, the Philippine Stock Exchange index climbed 26.56 points or 0.33% to close at 8,049.31. The broader all-shares index also rose by 15.31 points or 0.32% to 4,778.61. Except for financials and the mining and oil counter, all the other sector indices finished on the positive side.

Regina Capital’s Mr. Limlingan said: “Local optimism may also be underpinned by Hurricane Irma delivering a less forceful hit on Florida than expected and North Korea failing to conduct another nuclear missile test over the weekend.”

“However this may change depending on how US once again performs tonight,” he said on Tuesday.

Irma, once a Category 5 hurricane, hit the Florida coast over the weekend. It has gradually lost strength and has been downgraded to a tropical storm while moving its way across the land.

Other Southeast Asian stock markets inched up on Tuesday, with Malaysian shares hitting their highest in over two months, tracking a rally in Asian peers as Hurricane Irma weakened and concerns over North Korea eased.

MSCI’s broadest index of Asia-Pacific shares outside Japan  rose as much as 0.3% to their highest in nearly 10 years. — Victor V. Saulon with Reuters