Stocks down as investors turn cautious on tax bill

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THE MAIN INDEX slumped anew on Wednesday, failing to sustain early gains, as investors turned cautious on the government’s tax reform program. 

The benchmark Philippine Stock Exchange index (PSEi) dropped 0.18% or 15.38 points to close at 8,129.62 yesterday.

The all-shares index likewise shed 0.09% or 4.66 points to finish at 4,781.40.

Diversified Securities, Inc. equity trader Aniceto K. Pangan said the index’s movement in previous days was mostly due to technical corrections as investors take on a wait-and-see stance on the government’s tax reform program.

“There’s a continued concern of investors with regards to the tax reform plan of the government, and it is still creating this correction within the market. Especially with the big difference of the Senate vis-à-vis with that of the House of Representatives,” Mr. Pangan said in a phone interview yesterday.

The government is eyeing the implementation of new tax collection schemes by next quarter should Congress complete the reconciliation of two different versions of the bill from the Senate and the House of Representatives. 

“I believe this is the main reason that the market is moving towards the correction period,” Mr. Pangan said, adding that investor confidence would be dependent on the final version of the tax reform program.

Summit Securities, Inc. President Harry G. Liu also attributed the decline to the tax reform program, but further noted a psychological effect on the index due to the lower performances of its Asian counterparts. 

“Basically it follows most of the Asian market, it’s triggered by the Japanese market. Environment whole day was really setting a pressure for the market to be negative,” Mr. Liu said in a phone interview.

Japan’s Nikkei 225 took a 1.97% plunge on Wednesday, shedding 445.34 points to 22,177.04. The MSCI Asia Apex 50 meanwhile lost 1.91% or 25.09 points to 1,285.59.

Back home, sectoral counters were split, with three posting gains and three sustaining losses. The services sector advanced the most, rising 1.02% or 16.16 points to 1,597.70, followed by industrials which added 0.75% or 79.9 points to 10,732.90, and financials which climbed 0.13% or 2.75 points to 2,077.13.

Meanwhile, the property sub-index logged the largest drop at 1.05% or 40.72 points to 3,806.54. Mining and oil was down 0.97% or 111.11 points, while holding firms slipped 0.44% or 36.44 points to 8,236.71.

A total of 734.65 million issues changed hands for a P6.62-billion trading value for Wednesday. This is slimmer than the P7.81 billion recorded on Tuesday.

Decliners narrowly beat advancers, 95 to 90, while 59 issues were unchanged.

Foreign selling widened to P707.87 million on Wednesday from the P127.03 million recorded in the previous trading day. — Arra B. Francia

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