PHL shares fall nearly 7% as foreign funds flee emerging markets

The benchmark PSEi plummeted by almost 7 percent on Thursday as foreign funds continued an exodus from emerging markets in Southeast Asia driven by woes over an early tapering of US Federal Reserve bond-buying stimulus.

 

"It's... due to concerns about the US Fed tapering its quantitative easing," April Lee-Tan, head of research at COL Financial Group Inc., told GMA News Online. She noted the decline "is not... exclusive to the Philippines. Global and regional markets are also down."

 

The PSEi sank by 442.57 points or 675. percent to 6,114.08 at the close.

 

The market, which did not anticipate the scale of the sell-off, reflected ongoing concerns in the US, said Jonathan Ravelas, market strategist at BDO Unibank Inc. "This came a bit sudden, the market was caught with a left hook. But this further weakness... looks like there is still some more, " he said.

 

Ravelas noted this is the lowest close since February 2013. "We're close to the level at the start of the year," he said. 

 

In less than a month, the ongoing carnage trimmed down gains in the year-to-date at a mere 4.32 percent on Thursday's close amid "the continued realignment of portfolios of fund managers," said Astro del Castillo, First Grade Holdings Inc. managing director.

 

As of  May 15, when the PSEi closed at its 31st record high of 7,392.20 for the year, the main index gained 26.13 percent from January 2—the first trading day of the year.

 

"The continued decline has erased our gains for the year. Today's performance is the biggest single drop for this year," said Del Castillo. 

 

In his daily report, Accord Capital Equities Corp. analyst Justino B. Calaycay noted fund managers were re-balancing their portfolios. "It is quite rational for the flows to reverse as monies take advantage of the emerging signs pointing to the stirrings of a recovery in advanced economies," Calaycay noted.

 

Five years ago, funds looked for better yields after advanced economies pulled interest rates lower to near zero and injected liquidity in the financial markets, he said. "Funds sought better yields which... was presented by emerging markets," he added.

 

The broader all-shares index dropped 228.84 points or 5.63 percent to 3,834.87. All sub-indices were in the red led by property (-7.30 percent) and holding firms (-6.64 percent).

 

More than 2.48 billion shares valued at P16.14 billion changed hands.

 

Decliners outpaced advancers 182 to 18 while 24 issues were unchanged. — VS, GMA News