At the close of trading, the 30-company Philippine Stock Exchange Composite Index (Phisix) tumbled 30.1 points, or 2.7 percent, at 1,085.21, the lowest level since Nov. 22 last year. It fell past its key support of 1,100 in early trade. The market has now skidded 7.09 percent since the start of the year.
There was broad-based selling in the market but blue chips Philippine Long Distance Telephone Co. (PLDT) and Ayala Land Inc. took some of the heaviest losses as foreign investors unloaded the stocks due to jitters in global markets.
"Sentiment is being dragged not just by lack of direction in the local economy but also the poor performance of the US market and regionals," said Efren Cruz, fund manager of The Mutual Fund Management Co. of the Philippines.
At the Philippine Dealing System (PDS), the peso retreated to as low as 51.850 to the dollar during midday trading, before regaining some lost ground to close 26 centavos lower at 51.770 from Monday’s close of 51.510 to the dollar.
Finance officials downplayed the weakness of the peso, saying that it was merely tracking the general weakness of regional currencies.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Amando Tetango Jr. said this was not surprising since regional currencies have also been weakening. "It’s just the regionals," he said.
Although the stock market is still faced with domestic concerns such as a bloated budget deficit, volatile peso and lack of positive corporate news, the equities market took its cue from the weakness in most other major markets.
US stocks slumped on Monday, with the tech-heavy Nasdaq recording a fresh five-year low and the benchmark Dow Jones Industrial Index plummeting nearly 270 points.
"This murky outlook ripped in Philippine shores, enough to pull the bourse below its crucial 1,100 support barrier," a report by F. Yap Securities said.
Only 15 issues managed to post gains, while 44 others fell prey to profit taking with 31 holding steady. Value turnover was light at P409.815 million, which included P126-million worth of cross transactions.
Except for the oil sector, all sub-sectors ended in the red, led by property, (down five percent); commercial-industrials, (down two percent): and financials, (down 1.7 percent).
F. Yap Securities said with several of the index stocks trading at attractively cheap prices, they are affirming their long-term stance of gradual accumulation by initially setting respective buy-in targets.
"Institutional fund managers in developed markets would have to collectively initiate their forward-looking stance in equities trading, as risk-sensitive local players adopt a follow-the-leader strategy," F. Yap Securities report explained.
PLDT lost P17.50 at 282.50, one of the biggest losers in the market, pressured in part by the ongoing ownership battle in the company and the steep fall in its shares listed in New York.
"Ownership issues continue to weight down the streak. The market is getting fed up with the unresolved issues and it’s causing a negative effect as far as share prices is concerned," said Oliver Plana, analyst at Asiasec Equities Inc.
Digitel lost 6.35 percent or four centavos at 59 centavos. Liquor manufacturer La Tondeña Distillers Inc. closed unchanged at P31.50. The firm said it posted a net income of P814 million in the first six months of the year, up 48 percent from a year ago.
The market was also anticipating the release of the BSP’s gross international reserves figures which traders anticipated to be drastically low as the government paid off some of its obligations in July.
Until early this month, the BSP was unconcerned about the occasional dips of the peso against the dollar, saying that the GIR was comfortably at $14.8 billion.
BSP said the improvement in export earnings combined with the 45- percent increase in remittances from overseas Filipino workers (OFWs) was providing the government with enough international reserves.