Philippine stocks fell on Monday snapping six straight days of gains, following a sharp fall on Wall Street on Friday after the US Federal Open Markets Committee decided to keep the policy rates unchanged, putting into question the global economic health.
Yesterday, the Philippine Stock Exchange Index (PSEi) gave up 39.50 points, or -0.55 percent, to 7,092.41, while the broader All Shares Index (PSE:ALL) lost 21.74 points, or -0.53 percent, to 4,054.86, as market players engaged in profit-taking and re-assessed their positions following the development across the Pacific.
On Thursday (Friday, Manila time), the US FOMC decided to hold the interest rates steady, citing slowdown in emerging markets and not only in China putting pressure on the US economy, keeping inflation rate at bay.
The US Federal Reserve has always maintained its position to tighten monetary policy once the target inflation rate of two percent is reached, coupled with “maximum employment”.
“The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term,” the FOMC statement read.
The Dow Jones, NYSE, and Nasdaq all plunged by -1.74 percent, -1.8 percent, -1.36 percent, respectively, on Friday, as investors took the restraint of the US Fed as a sign that the world’s biggest economy still cannot take a lift off, amidst uncertainty around the globe, particularly in the world’s no. 2 economy.
On Monday, Asian markets followed the lead on Wall Street, saved for the mainland China equities market, which bucked the trend, while the Japanese market was closed for the holidays.
Five out of the six sub sectors declined, led by property stocks, which fell a huge -2.63 percent. Services retreated by -0.56 percent, while mining and oil, financials, and holding firms scaled back by -0.19 percent, -0.15 percent, and -0.08 percent, respectively.
On the other hand, the industrial sector bucked the trend and advanced by 0.3 percent, boosted by a sharp rise of electronics firm Ionics (PSE:ION), after an article published on the Philippine Daily Inquirer on Friday, September 18th, disclosed a possible partnership by the company with a Canadian-based technology firm, LeoNovus, to establish a “geo-distributed cloud”. Ionics has already denied any contract with said firm.
The rumors, nonetheless, drove market players to trade Ionics stocks, jumping by 29.31 percent to Php 3.00 per share yesterday, after nearly reaching the PSE-imposed ceiling last Friday, when it rose by 49.68 percent, to Php 2.32 a stock.
Meanwhile, shares of Semirara Mining and Power (PSE:SCC) advanced by 1.46 percent to Php 139 per share, after the Department of Energy ordered the resumption of operations of the Consunji-led energy firm’s Panian mine in Semirara Island in Antique.
In a letter sent to Victor Consunji, President of SCC, the DOE said it approved the resumption of operations “subject to oversight function and regular monitoring of the DOE Investigation Committee”, after complying with a host of demands to make the mine safer.
DOE ordered the suspension of operations of said mine after nine lives were taken following a landslide back in July.
Overall, however, more stocks declined compared to those which gained. Losers stood at 110, while gainers numbered at 71, with 35 unchanged issues.
Total market value reached Php 6.8 billion, while foreign funds were net buyers by Php 702 million.