Roundup: Philippine market closes lower as investors take safe side

Investors took the safe side on Thursday by booking their gains rather than risk looking them during the long break.

The bellwether Philippine Stock Exchange index lost 1.47 percent or 40.71 points to 2,720.18, while the all share index slipped by 1.2 percent or 21.34 points to 1,744.29. For the week, the Philippine market has lost 4.77 percent of its value after going down for three of the four trading sessions.

Trading on Thursday was within average where some 3.11 billion shares worth 3.62 billion pesos (75.35 million U.S. dollars). Foreign investors were net buyers at 332 million pesos (6.941 million U.S. dollars).

All six subsector indices also closed lower, led by the market' s usual darling mining and oil stocks which went down by 2.33 percent or 190.54 points to 7,985.75.

More stocks lost than gained their value 71 to 32 while 55 stocks did not move.

"Since the previous week, investors have been waiting for a correction. After the market went down for four times during the last five sessions, the debate now is whether this is just the usual correction or is there already a reversal from the bullish to a bearish sentiment," Jun Calaycay of local brokerage Accord Capital Equities Corp. said.

Calaycay said historical data shows that when the market went down during the 1997 financial crisis and bottomed out the following year, the local equities rallied for ten month before turning around and slipping down back to its 1998 low. The analyst said it turned out to be that the ten-month rally was just a bear market rally.

And since bottoming out in October last year and rallying since March this year, the market is now on its tenth month, rising fear that there could be a repeat in the 1998 situation.

But Calaycay said he feels that this week's decline is just part of the local market's overall correction. The dynamics of the stocks and the economy then and now are different, he pointed out.

For one, there is no controversy surrounding the stocks unlike a decade ago where the local exchange was rocked with price manipulation. Banks, he added, are healthier now and there the global recovery is already in sight.

"But investors came off from a big scare last year where they saw their gains cut by half. So they are still a bit sensitive about the market and [they tend to overreact] at time," Calaycay said.

The analyst pointed out that this is also the start of the ghost month and investors, especially the traditional ones, tend to stay out of the market first and wait for clearer signs before entering, especially now that the Philippine market is up for a long break.

The Philippine market is close on Friday in memory of the death of democracy icon Ninoy Aquino.

"Given also the volatility of the U.S. market, investors will naturally stay away first and see how the foreign markets will move over the weekend. These factors dragged down the market on Thursday," Calaycay said.

Most stocks in the 30-company index also closed lower on Thursday, led by the stocks of one of Philippines' most influential family, the Lopezes.

Philippines largest power distributor Manila Electric Co. lost 5.31 percent or 11 pesos (0.22 U.S. dollar) to 196 pesos (4.07 U.S. dollars).

Stocks of the Lopezes' holding companies Benpres Holding Corp. and First Philippine Holdings Corp. likewise tumbled by 5.26 percent or 0.20 pesos to 3.60 pesos (0.07 U.S. dollar) and 3.52 percent or 1.50 pesos (0.03 U.S. dollar) to 41 pesos (0.85 U.S. dollar).

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