US market slump drags down share prices

SHARE PRICES fell further yesterday, pulled down by the chain reaction of sell-offs that started in regional bourses in Asia on Monday on news that China plans to tighten bank lending, analysts said.

The benchmark Philippine Stock Exchange index closed down by 1.43% or 39.63 points to 2,731.55, while the all shares index slipped by 17.14 points to 1,746.84.

A total of 4.07 billion shares worth P3.19 billion changed hands. Decliners led advancers 72 to 33, while 55 did not move.

Jose Mari B. Lacson of Campos, Lanuza & Co. said the local bourse’s slide yesterday was caused by the decline in the US market, which itself was partly due to the weakening of regional bourses on Monday.

“The drop yesterday had a feedback loop… Markets in Asia performed weakly on Monday and it continued to the US and then affected us,” he said.

The Dow Jones industrial average finished at 9,135.34, down by 2% or 186.06 points. The Standard & Poor’s (S&P) 500 index gave up 2.43% or 24.36 points to end at 979.73, while the Nasdaq Composite index plunged by 2.75% or 54.68 points to 1,930.84.

Reuters reported that it was the Dow and S&P 500’s worst one-day percentage sell-offs since July 2.

Mr. Lacson said this was triggered by talks that the Chinese government would increase lending rates, signaling US investors to sell on concerns that the move would slow down that country’s growth.

The Shanghai stock exchange tumbled almost 6% on Monday, as investors grew anxious over the government’s plan there to tighten lending.

Oliver P. Plana of Asiasec Equities, Inc. said aside from the US market’s fall, the local bourse was also hit by the decision of foreign funds to sell their holdings, after the major companies disclosed their earnings.

Mr. Lacson agreed investors parted with their shares after the release of their first-half performance, which did not meet expectations.

“There are underlying concerns about the earnings in the Philippines since some of the reports were below expectations and cautions were made that the worst is not over… The sentiment is really to take profits so unless we see something that could change that, the selling would continue,” he said.

Mr. Plana noted that there were signs that some major markets in the region are improving, which could prop up local trading.

“The next major macro announcement is the [economic growth results for the first half on Aug. 27]…. So investors would observe day-to-day developments to guide them,” he said.

Holding firms were the only ones to end in green, inching up by 0.04% or 0.73 point to 1,515.46.

Mining and oil companies lost 1.91% or 153.65 points to 7,901.77 followed by service firms, which gave up 1.89% or 27.01 points to 1,394.69.

Shares of financial companies slid by 1.09% or 6.50 points to 591.73, industrial firms declined by 1.08% or 43.96 points to 4,011.50, and the property sector dipped by 0.78% or 7.53 points to 953.96.

Index heavyweight Philippine Long Distance Telephone Co. lost P55 or 2.23% to end at P2,415, while competitor Globe Telecom, Inc. shed 2.02% or P20 lower at P970.

Metropolitan Trust Bank & Trust Co. was unchanged at P37, while Sy-led Banco de Oro Unibank, Inc. declined by 1.45% or 50 centavos to P34. The Bank of the Philippine Islands eased by 2.19% or P1 to P44.50.

Jollibee Foods Corp. moved up by 1.96% or P1 to P52.

Entry Credit: http://www.bworldonline.com