PSEi enters bearish territory, drops 5.71% at early trades

Philippine share prices entered bear market on Wednesday, plunging nearly 6 percent in early trading, as investors focused on the Syrian conflict amid fears that the Federal Reserve (Fed) will taper its bond purchases next month.

 

The main PSEi plunged by 337.59 points or 5.71 percent to 5,579.40 as of 10:11 a.m. — below its January 2 closing of 5,860.99 which was the first trading day of the year.

 

In his daily outlook, Accord Capital Equities Corp. analyst Justino B. Calaycay. Jr. said the PSEi has now wiped out for the second time its gains in the year-to-date.

 

The first time this happened was on June 25, when the benchmark index plummeted to an intraday low of 5,678.73 and closed at 5,789.06.

 

"The overriding sentiment is negative, the over arching emotion fear. One breeds the other, [feeding on] the momentum of the southern heading," Calaycay said.

 

"Undeniably, whether justified or not, fears over anticipation that the Fed will taper the $85-billion quantitative easing program rings loud, resulting to a drop of such magnitude by the local stock market index," he added.

 

He noted that US and European market futures indexes suggest pessimism may continue as geopolitical concerns cloud over economic  data.

 

Western officials told the Syrian opposition to expect a strike within days, and US Defense Secretary Chuck Hagel said American forces in the region were "ready to go" if President Barack Obama gives the order, Reuters reported.

 

Calaycay said investors will question whether the a bearish sentiment can still be reversed after the PSEi retreated past the 20 percent line in the year-to-date Wednesday.

 

"If things do not take a turn in the next couple of sessions, the PSEi appears poised to register its third losing month in the last four," he said, adding that the last time this happened was in August to November 2010. — VS, GMA News