PSEi nosedives to 5,800 level on Fed taper hints

The benchmark Philippine Stock Exchange index fell back to the 5,800-level on Tuesday, as mounting speculations that the US Federal Reserve would cut stimulus measures this month pressured investors to go for the nearest market exit. 

 

The PSEi plunged 122.24 points or 2.04 percent to 5,886.40. The broader all shares index plummeted 68.22 points or 1.85 percent to 3,612.58. 

 

Losers overwhelmed gainers, 124 to 31, while 36 issues were unchanged. 

 

Over 633 million shares worth P7.005 billion changed hands. 

 

"Tapering woes triggered selling pressures for both local and foreign investors, which... accelerated after the PSEi broke the 5,970 support in the morning session," said Manny Cruz, market strategist at Asiasec Equities Inc. 

 

On Monday, St. Louis Fed president James Bullard said improving jobs data made tapering more likely but in a small manner, Reuters reported. 

 

Last Friday, the US Labor Department reported the unemployment rate fell to a 5-year low of 7 percent as employers added 203,000 jobs in November. 

 

"It's time to taper," the wire service cited Dallas Federal Reserve Bank President Richard Fisher as saying in Chicago on Monday. 

 

Apart from tapering worries, Cruz said concerns over stock valuations further depressed the market. 

 

"Even with the consolidation, local valuations are still stretched," he said, citing a price-to-earnings ratio of 16 times compared to the regional average of 13 times. 

 

The earnings ratio means investors must to pay 16 times more for each peso of earned by a publicly listed company. 

 

"Earnings of local corporations were not that good to deserve that kind of valuation," Cruz noted. 

 

Bets on the US stimulus tapering will continue ahead of the Federal Open Market Committee's policy meeting December 17 to 18, he added. – VS/BM, GMA News