By Denise A. Valdez
LOCAL stocks slipped on Friday, after an overnight drop in Wall Street and the central bank’s move to reduce banks’ required reserves.
The Philippine Stock Exchange index (PSEi) closed at 7,647.51, dropping 5.02 points or 0.07%. The broader all shares index, meanwhile, gained 7.32 points or 0.16% to close at 4,654.67.
Regina Capital Development Corp. managing director Luis A. Limlingan said the market’s performance was affected by a steep fall in energy-related shares in Wall Street on Thursday.
“The three main equity benchmarks in the US closed off the worst levels of the session after President Donald Trump canceled a planned summit with North Korean leader Kim Jong Un, citing ‘open hostility’ from the country,” he said.
On Thursday, Mr. Trump called off the planned meeting with Mr. Kim scheduled on June 12 because of North Korea’s “anger” and “hostility”.
For Aniceto K. Pangan, equities trader at Diversified Securities, Inc., there were no strong factors to push the market higher.
“Market continued its consolidation today with a downward bias on profit taking due to absence of catalyst,” he said.
The market also reacted to the Bangko Sentral ng Pilipinas’ (BSP) announcement on Thursday that it was cutting the banks’ reserve requirement ratio by one percentage point. The move is expected to add around P100 billion to the financial system, after it takes effect on June 1.
“The market was buoyed by the BSP trimming its reserve requirement to 18% effective June 1. Note that the BSP has a lot of room still to cut the reserve requirement as the average for the region is around 7.5%,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said.
Sectoral indices ended mixed on Friday. The property index lost 17.67 points or 0.46% to close at 3,820.46, followed by financials which slipped 11.54 points or 0.6% to 1,882.51. Services fell by 6.75 points or 0.44% to 1,512.16.
On the other hand, industrials added 79.33 points or 0.73% to close at 10,974.36, while mining and oil advanced 33.82 points or 0.34% to 9,744.15. Holding firms gained 31.84 points or 0.43% to 7,506.16.
Value turnover remained low at P4.8 billion, while net foreign selling increased to P268 million.
Advancers outnumbered decliners, 95-92, with 56 left unchanged.
For Mr. Pangan of Diversified Securities, the market next week “may retest the 7,500 major support level due to renewed uptrend of US 10-year treasury yields.”
Regina Capital’s Mr. Limlingan said traders will be looking at MSCI, Inc.’s completion of its rebalancing, as well as bank lending data and Nikkei Asian Review’s Purchasing Manager Index (PMI).
“Overseas investors will take cues from PMI and growth numbers in the US, unemployment updates in the EU, and manufacturing data from China,” he said.