MANILA – Philippine share prices tumbled on Monday on renewed concerns that the US Federal Reserve will scale back its economic stimulus sooner than expected.
At the Philippine Stock Exchange, the benchmark index fell 41.99 points or 0.64 percent to close at 6,543.39. Except for the marginal gain of the property sub-index, the other counters were in the red, led by the financial sector, which shed nearly a percent.
Decliners beat advancers, 89 to 58, while 38 issues were unchanged. A total of 1.25 billion stocks worth P6.59 billion changed hands.
Most actively traded stocks were Ayala Corp, PLDT, SM Prime, Metrobank and Ayala Land. Top gainers were Cirtek, Lorenzo Shipping and iRipple, while the biggest losers were Forum Pacific, Greenergy and IP E-Game.
"Fed tapering concerns were rekindled following a speech made by Richard Fisher, president of the Federal Reserve Bank of Dallas, suggesting a possible shift in rhetoric," said Jun Calaycay of Accord Capital Equities Corp.
"Fisher alluded to a need for the Fed to resume normal policy as soon as possible," Calaycay said, adding that liquidity in the region was stymied by a holiday in Japan.
Add to that, domestic liquidity was tapped out by the series of initial public offerings as well as Fed tapering concerns, the analyst said.
Later this week, the US is set to release the payrolls report, a soft reading in which might prompt the Fed to withhold tapering of its monthly asset purchases in December.
The US central bank's $85-billion bond-buying program – the third tranche of what has come to be called “quantitative easing” (QE3) – has been a key driver of equities rallies in the past several months.
Stock markets, particularly in emerging markets like the Philippines, have been taking a beating since Fed chairman Ben S. Bernanke signaled in mid-May that the US central bank might cut its massive stimulus program should the US economy show signs of recovery. The Fed has decided to keep the pace of stimulus intact in the last two policy meetings.
"Although the bearish mood appears to have thinned, the market remains rather uninspired – listless it seems. Despite the rosy picture for the economy, a political environment challenged, but not destabilized, by the usual controversies and a decent earnings scorecard through the first nine months, investors don’t appear convinced there remains room for an upside in the final two months of the year," Calaycay said.
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