By Denise A. Valdez, Reporter
LOCAL SHARES dropped on Thursday due to drawbacks in the US-China trade talks, which stoked fears of the lack of an agreement by yearend.
The benchmark Philippine Stock Exchange index (PSEi) erased 79.17 points or 1% to close at 7,818.89 on Thursday, as the broader all-shares index lost 46.64 points or 0.98% to 4,670.76.
“Philippine stocks ended in the red after a report that a trade deal might not be completed this year and after China condemned a US Senate resolution supporting human rights in Hong Kong,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a mobile message yesterday.
Reuters reported on Thursday that the “phase one” US-China trade deal, which has been in the works since last month, may not see its signing within 2019, citing trade experts and people close to the White House.
The report said Beijing’s request to further reduce tariffs on Chinese products and America’s retaliatory demands are getting in the way of the negotiations. It quoted US President Donald Trump as saying he thinks China is “(not) stepping up to the level that (he wants),” which casts greater doubt on the progress of the talks.
Adding another layer to the tension is the US Congress’ passage of a human rights bill aiming to protect Hong Kong nationals. Reuters reported China is dismayed with the development as it had previously asked the measure to not be passed.
AAA Southeast Equities, Inc. Research Head Christopher John Mangun referred to the same reason for the market’s decline on Thursday, saying in an e-mail: “Investors view the recent developments as a major setback to the “phase one” deal that should have been signed by now.”
Amid the global developments, Wall Street ended Wednesday’s trading on red territory: the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite indices fell 0.40%, 0.38% and 0.51%, respectively.
Back home, all sectoral indices went down: mining and oil by 496.42 points or 5.85% to 7,984.61; financials by 32.71 points or 1.71% to 1,880.29; property by 56.52 points or 1.38% to 4,035.26; industrials by 109.09 points or 1.09% to 9,880.67; services by 7.09 points or 0.45% to 1,542.53; and holding firms by 33.47 points or 0.43% to 7,755.15.
Value turnover climbed to P5.72 billion from P4.13 billion on Wednesday, as 781.11 million issues switched hands.
Stocks that lost outnumbered those that gained, 157 against 38, while 41 names were unchanged at Thursday’s close.
Foreign outflows increased on Thursday with net selling reaching P1 billion from Wednesday’s P655.08 million.
“The pickup in foreign outflows coupled with low volumes took a toll on the index… We may see a minor bounce in tomorrow’s trading but it is almost guaranteed that it will end in the red for the week,” Mr. Mangun said on Thursday. — with Reuters