Philippine Stocks Enter Bear Market and More Pain May Be Ahead

buddywbuddyw Member PEx Influencer ⭐⭐⭐

Philippine Stocks Enter Bear Market and More Pain May Be Ahead

  • Philippine Stock Exchange Index slides for sixth straight day
  • Rate hike unlikely to stop peso’s weakness, BDO Unibank says

The Philippine central bank needs to do more to help stocks recover from a slump that has pushed them into bear market territory and made them Asia’s worst performers this year, according to investors.

The Philippine Stock Exchange Index sank 2.3 percent on Thursday, leaving it down more than 20 percent from its January peak.

Fritz Ocampo, who manages about $19 billion as chief investment officer at BDO Unibank Inc. in Makati, said the central bank’s second interest rate hike this year on Wednesday will fail to fuel a sustainable rebound in stocks because it’s not enough to fully arrest the local currency’s slide, as inflation has yet to peak. The Philippine peso has lost 6.7 percent this year, the biggest drop among Asian currencies.

“The market needs a clear announcement to calm nerves,” Ocampo said. “We may have not seen the bottom yet. Any rally could be short-lived because international investors are unwinding out of emerging markets.”

Over $43 billion in market value has vanished this year as the benchmark slid more than 17 percent, the world’s worst performer after Turkey. From its record close on Jan. 29, the Philippine Stock Exchange Index has slumped 22 percent, breaching the 7,246.90 level that marks a bear market. It closed at 7,098.15 Thursday, a seventeen-month low.

“Investors are still jittery,” said Manny Cruz, analyst at Asiasec Equities Inc. in Manila. “The foreign selloff remains relentless as the rate increase hasn’t provided a catalyst while prospects escalated that a trade war will erupt between the U.S. and China.”

Today’s selloff drove Philippine stock index valuations to 15.3 times projected 12-month earnings, its cheapest level since Jan. 26, 2016, and down from 19.9 on Jan. 23. The multiple is more than two standard deviations below its five-year average, a level that preceded rallies in 2013 and 2016.

If the index eventually rallies, its climb may be limited to about 7,600 as it mimics last month’s pattern, Ocampo said. The index rose over 300 points in two sessions after the May 10 hike and then went southbound as inflation accelerated and the peso slumped to a 12-year low against the dollar.

Investors think another 25 basis point hike may be needed this year to keep inflation in check and stem the peso’s depreciation, Ocampo said. Wednesday’s rate increase may not be enough to keep up with the Federal Reserve, which has indicated that it may lift as many as four times this year, he added.

The latest central bank hike didn’t prevent the iShares MSCI Philippines ETF from falling 1.5 percent overnight in the U.S., its 10th straight day of declines and longest losing streak since June 2013. More than $51 billion in market value has been erased since share prices declined from the peak in January.

Foreign fund withdrawals, which reached $1.14 billion so far this year, could climb to $2 billion by December unless the exodus slows, Ocampo said. He is overweight property companies because of strong residential sales and project launches. Retailers are also attractive as they can pass on the higher cost of goods.

All but four of the 30 components of the benchmark stock index fell in Manila today led by phone operator PLDT Inc., which slumped 6.5 percent, and largest Philippine builder SM Prime Holdings Inc., which declined 4.6 percent. SM Investments Corp., the gauge’s biggest member, fell 1 percent.

“Foreign funds outflow isn’t showing signs of letting up,” Ocampo said, adding that the index could test 7,000 in the near term as the selloff may escalate before the benchmark recovers to 8,500 by year-end. “Cash is king for now.”




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Comments

  • JUST_JT_JUST_JT_ weh di nga PEx Influencer ⭐⭐⭐
    OMG WE'RE DOOM DAMN DU30 ...
    YEAH LETS BLAME DU30 YEAH 
  • BeerhandBopBeerhandBop I Am WHIP PEx Influencer ⭐⭐⭐
    no one's blaming duterte. to blame is to put the fault to somone without basis. kaso.. may basis talaga e. LoL. 


  • buddywbuddyw Member PEx Influencer ⭐⭐⭐

    Philippine stocks dive into bear territory

    With the current bloodbath in the local bourse, investors ask if it's a good time to buy cheap stocks

    MANILA, Philippines – The Philippine Stock Exchange index (PSEi) plunged to its weakest level in more than 19 months, closing at 7,098.15 on Thursday, June 21.

    The sustained bloodbath in the PSEi confirmed that it is now well within bear market territory. The index shed over 20% from the record high of 9,078.37 last January. (READ: PSE named Southeast Asia's best stock exchange again)

    The benchmark lost 163.47 points or 2.25% at the closing bell.

    So far, over $43 billion in market value has been wiped out this year. The PSEi is now Asia's worst performer.

    A bear market occurs when there is widespread pessimism, causing a drop of at least 20% over a two-month period. The term was named after a bear swiping downward at its prey.

    The opposite of this is the bull market, named after a bull thrusting its horns upward.

    Luis Limlingan, managing director of Regina Capital Development Corporation, said the meltdown in the PSEi showed that "the needed BSP (Bangko Sentral ng Pilipinas) rate hike was still not taken positively as the decision came behind the curve."

    The BSP had imposed another rate hike on Wednesday, June 20, to help temper inflation.

    "We were expecting the BSP to wait to hike in August, but policymakers may have opted to act sooner given upside risks to already-above-target inflation in coming months and the further depreciation in the peso (one of the worst-performing currencies in Asia) since early June.... Policymakers appear to want to keep their options open as they assess the incoming data," Limlingan said.

    He added that the bearish sentiment was not isolated to the local bourse.

    "US stocks were lifted by a rally in tech shares as concerns eased about a potential global trade war. The S&P 500 broke a 3-day losing streak and the Nasdaq Composite Index added to an all-time high, buoyed by Facebook Incorporated's rally past $200 a share. However, the Dow Jones Industrial Average posted its 7th consecutive daily decline, its longest losing streak since March 2017. European stocks bounced off a 3-week low as traders came to terms with the further deterioration in trade relations between the US and China," Limlingan said.

    With the current bloodbath in the local bourse, some investors are looking into buying cheap stocks.

    But Jonathan Ravelas, chief market strategist of BDO Unibank, quipped in a tweet: "Market investors are now waiting for a dead cat bounce as market levels register cheaper valuations. But the cat is still falling."

    The term "dead cat bounce" means a temporary recovery from a decline or a bear market. The term is based on a dead cat that will bounce after it falls.

    Meanwhile, Stock Smarts author Marvin Germo gave this warning: "The market must stay above 7,100 to have a chance not to drop even lower. The market is already relatively oversold, but still in pursuit of its downward projection."


  • joerizjoeriz Member PEx Influencer ⭐⭐⭐
    Baaaaaaaaaaad!  Specially if some government agencies, like SSS and PhilHealth invest on stocks to provide additional income for their funds.
  • gotta lick itgotta lick it Member PEx Influencer ⭐⭐⭐
    ^ malabo iyan sir. matalaga ng sinalo ng SSS at GSIS ang PSE. ang dami nilang overvalued stocks. dapat nga i-release na nila iyun kundi apektado ang retiement fund ng mga contributors.



    even BDO has dropped its Equity Funds. they opened a new scheme. they will be your broker but you will choose the your preferred stock. and when it goes south, you have nobody to blame but yourself. but BDO gets the brokers fee all the time.


    JUST_JT_ said:
    OMG WE'RE DOOM DAMN DU30 ...
    YEAH LETS BLAME DU30 YEAH 
    DOOMsayer ka na rin?



    read my lips. I.Told.You.Soh. DOOM! DOOM!! DOOMterte!!!
  • Darius03Darius03 Member PEx Influencer ⭐⭐⭐
    edited June 2018
    If it is any consolation, Philippines is just one of countries in Asia that suffered stock market setback! The entire Asia region stocks dive into bull market territory, except for India. India is the only one that showed a gain! China is the big loser. Practically, if we believe the doomsayers, the entire Asia (except for India) is DOOMED, DOOMED, DOOMED?
    And Duterte alone could not have brought the doom!
    Got a better perspective now?


    Here is how much Asian markets suffered in the past two weeks (with India as the exception):
    Country    Change in equity market cap (U.S. dollars, millions)

    China    -745,864
    Hong Kong    -359,190
    South Korea    -154,443
    Japan    -124,427
    Taiwan    -55,891
    Thailand    -37,190
    Indonesia    -33,426
    Singapore    -30,178
    Australia    -23,947
    Philippines    -22,839
    Malaysia    -20,447
    Vietnam    -12,036
    Pakistan    -5,724
    New Zealand    -1,059
    Sri Lanka    -457
    India    +5,783

  • knorrknorr 8anned by Abmin PExer
    edited June 2018
    Kasalanan ng delawan yan

  • gotta lick itgotta lick it Member PEx Influencer ⭐⭐⭐
    ^ bakit ngayon lang. dapat 2017 pa sila gumawa ng paraan laban sa inflation.



    TIP:
    fire or demote all of those incompetent NEDA and DOF economic managers who said the TRAIN LAW is good for the Philippines.
  • Darius03Darius03 Member PEx Influencer ⭐⭐⭐
    Darius03 said:
    If it is any consolation, Philippines is just one of countries in Asia that suffered stock market setback! The entire Asia region stocks dive into bull market territory, except for India. India is the only one that showed a gain! China is the big loser. Practically, if we believe the doomsayers, the entire Asia (except for India) is DOOMED, DOOMED, DOOMED?
    And Duterte alone could not have brought the doom!
    Got a better perspective now?


    Here is how much Asian markets suffered in the past two weeks (with India as the exception):

    Country          Change in equity market cap (U.S. dollars, millions)
    China            -745,864
    Hong Kong     -359,190
    South Korea    -154,443
    Japan            -124,427
    Taiwan           -55,891
    Thailand         -37,190
    Indonesia       -33,426
    Singapore       -30,178
    Australia         -23,947
    Philippines    -22,839
    Malaysia        -20,447
    Vietnam        -12,036
    Pakistan        -5,724
    New Zealand   -1,059
    Sri Lanka        -457
    India          +5,783

    The complete story can change one's perspective on Philippines bull market. The Philippines is just the 10th in the list of Asian nations that nosedived into the bull market. Are the Presidents of these other nations to blame, too?
  • sweet.twinssweet.twins sugary PEx Influencer ⭐⭐⭐
    a "bull market" is one that is going up. what are you talking about?
  • donjuan0010donjuan0010 Member PEx Veteran ⭐⭐
    edited June 2018
    Di bale malapit naman na ma-implement short selling. Pabagsakin pa natin yan hanggang 4k level.
  • buddywbuddyw Member PEx Influencer ⭐⭐⭐

    Philippines' Hike Not Enough for Asia's Worst Market: Analysts


    While the Philippine central bank increased its benchmark interest rate for a second month, the action isn’t enough to help lift Asia’s worst-performing market, according to some analysts.

    The Philippine peso has weakened more than 6 percent against the dollar this year to a 12-year low, while the equity benchmark has slid 15 percent. Both markets, which rank at the bottom in Asia, were closed before the rate decision was announced on Wednesday, though one-month dollar-peso non-deliverable forwards gained 0.3 percent to 53.65 as of 10:27 a.m. in London.

    Here’s a detailed look at what strategists have to say:

    Krung Thai Bank (Jitipol Puksamatanan)

    • The rate hike by the Philippine central bank will probably only help to stop declines in the peso in the short term, and the action isn’t enough because the key rate remains below the nation’s inflation
    • The move is unlikely to help strengthen the currency
    • A significant depreciation in the peso would be negative for their inflation, while the peso may weaken further to as low as 54.50 in the third quarter

    CBA (Andy Ji)

    • Bangko Sentral ng Pilipinas could deliver another interest-rate increase this year, after the hike on Wednesday, as inflation will probably quicken if the peso remains weak
    • Further hikes will do little to bolster the peso as the Federal Reserve is expected to embark on a more aggressive tightening path
    • The peso is more vulnerable than regional peers to higher U.S. interest rates as the Philippines has a more acute inflation problem

    AB Capital (Lexter Azurin)

    • The rate hike should ease investor concerns on the peso, which in turn will be good for equities
    • One of the reasons for the market selloff in the past few months is uncertainty over the policy environment. He pushed with cutting reserve requirements at a time that inflation is rising
    • Philippine stocks are becoming attractive at current level given cheap valuations

    AP Securities (Rachelle Cruz)

    • For the equities market, a rate hike is better than no rate hike. This is meant to calm the market and anchor inflation expectations
    • There’s more room for peso weakness if inflation peaks in the third quarter of this year and BSP doesn’t increase rates during its August meeting
    • This will put pressure on the peso and the stock market will remain weak because foreign selloff will continue

    Standard Chartered (Divya Devesh)

    • The Philippine central bank’s rate increase “certainly provides some respite” for the peso, but the currency is likely to continue to underperform
    • A key reason for the peso’s underperformance has been weak external balances, and that is unlikely to change in the short term

    TD Securities (Mitul Kotecha)

    • The rate hike on Wednesday isn’t going to help the beleaguered peso much given still relatively low real yields and current-account deficit
    • Over the near term, the peso may benefit from some consolidation in risk appetite but the dollar-peso pair is likely to remain in upward trend
    • Breach of the next psychologically important level at 54 will be in focus


  • joerizjoeriz Member PEx Influencer ⭐⭐⭐
    edited June 2018

    Stock bear market is just one of Philippines problems now and expect more to come! Brace yourself! No tears will ease problems Pinoys are facing. Duterte hasn't solved any and problems keep on piling one after the other. Duterte is incompetent! Just all talks and badmouthings!
  • gotta lick itgotta lick it Member PEx Influencer ⭐⭐⭐

    It is not more Pain AHEAD but rather most Philippine Companies have POOR FUNDAMENTALS because of the Duterte Economic Policy.

  • knorrknorr 8anned by Abmin PExer
    Ibalik na si Erap at gawing Finance SEc si Atong Ang.
    Jueting lang pala ang solution sa bagsak na economy


  • buddywbuddyw Member PEx Influencer ⭐⭐⭐

    PSEi closes at lowest level since January 2017

    Philippine shares sink further into bear market territory as the Philippine Stock Exchange index closes at its lowest level since January 2017. Analysts don't expect the PSE's recently approved short-selling measures to lift sentiment

  • buddywbuddyw Member PEx Influencer ⭐⭐⭐

    In this bearish market, stay invested, but manage your risk


    To make money in the stock market, you need to buy low and sell high. But if this strategy were so simple and obvious, why aren’t people scrambling to buy stocks given that the Philippine Stock Exchange Index (PSEi) is now trading more than 20-percent off from its peak of 9,058.62? On the contrary, investors are starting to panic, with the index now at the dreaded bear market territory.

    But for the smart and rational investor, now is a great time to accumulate stocks. Although the Philippines is encountering some challenges, these issues are not enough to justify a bear market. In fact, factors that triggered the stock market correction during the start of the year are already starting to diminish.

    There are signs that inflation could peak soon. After hitting a high of $74.98/barrel last May 23, the price of oil has finally stopped increasing on news that Saudi Arabia’s energy minister Khalid Al-Falih is in discussions with Russia and other Opec nations to increase oil production and ease global supply concerns.

    The price of rice should also go down soon given the large volume of rice imports arriving in the country this month. Note that aside from oil, the increasing price of rice was one of the factors that pushed up inflation earlier this year as the staple accounted for 9.6 percent of the consumer basket.

    The BSP also finally raised interest rates by a total of 50 basis points in May and June after hesitating to take action during the start of the year. It also said it was “prepared to take further policy action as needed” to keep inflation at bay.

    Finally, the negatives are already priced in as evidenced by higher market rates and cheaper valuations of stocks. The 10-year bond rate is currently at 6.5 percent, up significantly from only 5.2 percent during the start of the year. Meanwhile, the PSEi is currently trading at only 16X P/E (price-earnings ratio), way below the 17.9X average P/E during the past five years. Analysts have also revised their forecasts to more conservative levels, which is good because the new forecasts are much easier to beat.

    Admittedly, it is difficult for someone who regularly monitors the stock market not to be fearful as the PSEi broke the critical 7,500 technical support recently and fell by a total of 8.8 percent the past two weeks. Even with the growing number of indicators that inflation is peaking, foreign selling was relentless, reaching a daily average of $25 million during the last two weeks, up significantly from the year-to-date average of only $10 million per day.

    However, the sell-off during the last two weeks was not caused by any fundamental developments locally but due to prevailing sentiments as other emerging markets also saw their stock markets fall.

    On June 13, the US Fed said two more rate hikes were appropriate until the end of the year, bringing the total number of adjustments for 2018 to four.

    Meanwhile, the trade tension between the US and China intensified. After announcing tariffs of up to 25 percent on $50 billion worth of Chinese imports on June 15, President Trump last Monday ordered the identification of $200 billion worth of Chinese goods for additional tariffs of 10 percent and another $200 billion more if the Chinese government retaliates again.

    In reaction, emerging market stocks fell by 4.9 percent in the last two weeks (based on the performance of the MSCI Emerging Markets Index) due to concerns that emerging market economies heavily dependent on exports would be hurt indirectly by the intensifying trade war between the US and China.


  • joerizjoeriz Member PEx Influencer ⭐⭐⭐

    It is not more Pain AHEAD but rather most Philippine Companies have POOR FUNDAMENTALS because of the Duterte Economic Policy.

    No Pain, No Gain!
  • private-iprivate-i Member PEx Influencer ⭐⭐⭐

    (Look) Are the Economy and Markets Better Off After Two Years of Duterte?

    A snapshot of key economic and financial indicators as the president marks his second year in power
    By Pauline Macaraeg | Jun 29, 2018

     

     

     

    Two years have passed since President Rodrigo Duterte took office. In that span of time, how has his administration affected the Philippine economy and markets?

     

    Contrary to what the president said in a summit in Davao last June 22 that “the economy is in the doldrums,” data show that the Philippine gross domestic product growth has been sustained in the previous quarters. Unemployment has also been going down and is at a noticeably lower rate compared to the period before Duterte took office.

     

    The government’s tax collections have risen by 41 percent since the president's inauguration. And as expected from the administration’s aggressive push for its Build, Build, Build program, infrastructure and other capital outlays spending has increased by 26 percent since June 2016.

     

    To be sure, it is not enough to look at just one or two indicators to fully assess how the Philippine economy is faring under Duterte. Other data suggest that along with the expansion of the economy are the rising prices and fall of the markets.

     

    Largely driven by the tax reform law and world oil prices, the Philippine headline inflation is now at a five-year high.

     

    The Philippine peso is falling at an alarming rate, closing at a 12-year low on June 28, Thursday. As well, the Philippine Stock Exchange Composite Index (PSEi) has recently entered the bear market after suffering a 20-percent decline from its recent peak in January.

     

    Lastly, Treasury Bill rates, which are used in setting lending rates that are considered one of the major costs of doing business, have been rising, too. The 91-Day Treasury Bill rates have more than doubled in Duterte’s first two years.

     

    The general consensus among economic analysts seems to be that despite the short-term bleakness in the stock and foreign exchange markets, long-term prospects for the economy seem very good, especially with rising infrastructure spending and tax revenues. If Duterte could only go easy on what London-based research firm Capital Economics analyst called his “erratic and crass leadership style,” the prospects might even be better.

     

     

    *****

     

     

    Pauline Macaraeg is Entrepreneur PH's data journalist. Follow her on Twitter @paulinemacaraeg

  • buddywbuddyw Member PEx Influencer ⭐⭐⭐

     Du30 Year 2: It's the economy, stupid

    Taxes, inflation, peso in spotlight as Duterte marks 2nd year

    After the war on drugs took center stage in President Duterte's first year in office, gut issues related to the Philippine economy were in the spotlight in the second year of the administration. 

    The first package of the Tax Reform for Acceleration and Inclusion (TRAIN) took effect in 2018, with income tax breaks being offset by higher taxes on commodities such as oil and sugar-sweetened beverages. 

    Due partly to higher world oil prices and a shortage of subsidized NFA rice, consumers grappled with rising inflation that prompted monetary authorities to raise borrowing costs for the first time in 2 years.

    Here are some key economic events that happened in the last 12 months, with President Rodrigo Duterte saying the "economy is in the doldrums" around a week before completing a third of his 6-year term. 


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