PHL stocks decline anew on geopolitical concerns

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AFTER CLIMBING for two straight days, the bellwether index slipped on Wednesday as tensions in the Korean peninsula weighed on local equities.

The Philippine Stock Exchange index (PSEi) dropped by 65.38 points or 0.81% to finish at 7,983.97 yesterday.

The all-shares index also lost 27.72 points or 0.58% to end at 4,739.21.

“Philippine stocks fell alongside other Asian markets, as the simmering global tension provoked by North Korea took center stage,” said RCBC Securities Research in its daily stock market recap.

“Philippine and US stocks sank coming back from a holiday break, as investors sold stocks due to tension at the two divided Korea(s). Look to a negative start as sentiments look to be still weak, with investors eyeing developments at Korea,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.

He said a top North Korean diplomat, Han Tae Song, ambassador to the United Nations in Geneva, confirmed that Pyongyang had successfully conducted its sixth and largest nuclear bomb test on Sunday.

The diplomat said the US “will receive more ‘gift packages’ from my country as long as it relies on reckless provocations and futile attempts to put pressure on the DPRK (Democratic People’s Republic of Korea).”

Mr. Limlingan said Russia’s UN Ambassador Vassily Nebenzia said on Tuesday that a US bid for the Security Council to vote on Sept. 11 on new sanctions is “a little premature.” Russia is a permanent member of the Security Council and has veto power, he added.

“Fed[eral Reserve governor] Lael Brainard said the Fed may have to slow down its pace of interest-rate hikes, citing the recent low readings for inflation,” he said, adding that the Fed official indicated that if low inflation “proves transitory,” then the central bank may continue its current expected pace, for one additional hike in 2017 and three in 2018.

All sectoral indices closed lower yesterday, with mining and oil leading the decline as it dropped 154.77 points or 1.13% to 13,431.82.

Financial stocks were down 19.1 points or 0.96% to 1,963.51; holding firms gave up 70.82 points or 0.89% to 7,870.87; property issues declined by 20.5 points or 0.54% to 3,760.77; services slipped 8.82 points or 0.50% to 1,726.74; and industrials gave up 23.19 points or 0.20% to 11,150.95.

Value turnover came in a P6.72 billion as 2.71 billion shares changed hands, higher than Tuesday’s P5.84 billion worth.

Market breadth was negative, with 111 losing issues as against 71 advancers. A total of 66 stocks finished unchanged. Foreigners were net sellers at P315.63 million, higher than the previous session’s net outflow of P123.61 million.

Other Southeast Asian stock markets also fell on Wednesday as simmering tensions between North Korea and the United States continued to weigh on investor confidence.— VVS with Reuters