STOCKS declined on Wednesday after the Health department proposed a possible extension of the enhanced community quarantine (ECQ), with the government’s pandemic task force expected to meet on Saturday to decide on the matter.
The 30-member Philippine Stock Exchange index (PSEi) dropped by 102.46 points or 1.56% to close at 6,443.09 on Wednesday. The broader all shares index also went down by 41.57 points or 1.04% to 3,924.29.
“The market plunged back to the 6,400 level and heavy foreign selling was seen after the DoH (Department of Health) stated that the Greater Manila Area should stay under ECQ for two more weeks to curb the virus count,” AB Capital Securities, Inc. Junior Equity Analyst Lance U. Soledad said in a Viber message.
Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message that the market continued to decline as the country’s coronavirus disease 2019 (COVID-19) infections increased. Over 9,000 new COVID-19 cases have been reported daily for the past five days.
“[Also, the] inflation rate will continue to breach the 2-4% range of [the] BSP (Bangko Sentral ng Pilipinas) due to tight food supply and increasing oil price,” Mr. Pangan added.
Headline inflation likely settled within 4.2% to 5% in March, the BSP said on Wednesday, on higher oil prices and the peso’s depreciation. This is beyond the 2-4% annual target.
The Philippine Statistics Authority will report the March inflation data on April 6.
The BSP’s point inflation projection for March is 4.6%, which, if realized, will be slower than the 4.7% print in February but higher than the 2.5% seen in the same month a year ago.
The central bank expects inflation to average at 4.2% this year.
Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said the Holy Week trading break also prompted investors to cash out.
“Investors liquidated positions ahead of the upcoming holidays,” Mr. Tantiangco said.
All of the sectoral indices closed in the red on Wednesday. Property declined by 67.5 points or 2.05% to 3,211.92; financials went down by 25.51 points or 1.82% to finish at 1,373.83; holding firms fell by 81.94 points or 1.24% to 6,524.81; services gave up 15.66 points or 1.09% to 1,414.59; mining and oil dropped by 82.94 points or 0.96% to 8,476.93; and industrials decreased by 44.79 points or 0.51% to close at 8,609.69.
Value turnover climbed to P6.5 billion on Wednesday with 2.04 billion issues switching hands from the P4.7 billion with 1.5 billion shares traded on Tuesday.
Decliners beat advancers, 113 against 97, while 50 names closed unchanged.
Net foreign selling ballooned to P1.7 billion on Wednesday from the P483.34 million on Tuesday.
“We expect to see sustained weakness in the market, should the government decide to extend the ECQ, with support levels at 6,400 and 6,200,” AB Capital Securities’ Mr. Soledad said. — K.C.G. Valmonte