LOCAL SHARES failed to keep their momentum on Wednesday as profit takers swarmed the market due to the lack of a strong catalyst.
The 30-member Philippine Stock Exchange index (PSEi) lost 144.47 points or 2.19% to close at 6,439.37, while the broader all shares index gave up 75.99 points or 1.96% to end at 3,786.10.
“The Philippine market took a breather amid concerns regarding the speed and size of the recent rally,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.
After trading within the 5,000 level since late March until the end of May, the PSEi made a strong rebound beginning on June 2 and jumped from 5,930.17 on June 1 to 6,517.49 as early as June 4.
Brokers said the primary driver of investor optimism was the easing of lockdowns in the Philippines and across the world and news of a potential coronavirus disease 2019 (COVID-19) vaccine.
But Philstocks Financial, Inc. Research Associate Claire T. Alviar said these factors were not enough to sustain the rally on Wednesday.
“The recent rally was supported only by investors participation… There was no strong catalyst aside from the hopes of economic recovery after lockdown measures eased,” she said in a text message.
Mr. Limlingan said investors also opted to stay on the sidelines in anticipation of the Federal Open Market Committee meeting. The US Federal Reserve is set to convene for its monetary policy decision on Wednesday night, Philippine time, amid the ongoing pandemic.
The S&P 500 and Dow fell on Tuesday, pausing after recent strong gains as focus shifted to the Federal Reserve, while the Nasdaq ended at an all-time high for a second straight day after briefly rising above the 10,000 mark for the first time.
US markets closed mixed on Tuesday. The Dow Jones Industrial Average and S&P 500 indices shed 1.09% and 0.78%, respectively, while the Nasdaq Composite index increased 0.29%.
Ms. Alviar said investor sentiment was also dampened by the World Bank’s projection that Philippine gross domestic product may shrink by 1.9% this year and 1.2 million Filipinos may fall into poverty.
All sectoral indices at the PSE closed in red territory. Mining and oil dropped 209.65 points or 3.83% to 5,260.90; financials erased 43.55 points or 3.22% to 1,309.13; property shaved off 85.33 points or 2.57% to 3,229.28; holding firms lost 165.15 points or 2.45% to 6,551.17; industrials fell 93.02 points or 1.13% to 8,127.94; and services trimmed 4.97 points or 0.34% to 1,437.55.
Value turnover stood at P8.96 billion with 825.25 million issues switching hands, slightly higher than the previous day’s turnover of P8.54 billion with 980.80 million issues. Decliners outpaced advancers, 147 against 55, while 41 names ended unchanged.
Foreign investors remained net buyers with net inflows of P318.79 million on Wednesday from P62.32 million the previous day. — Denise A. Valdez with Reuters