Share prices tumble after yuan devaluation

MANILA, Philippines - Share prices tumbled yesterday, with the benchmark index weakening below the 7,500-mark after China allowed the yuan to drop.

At the Philippine Stock Exchange, the main index retreated 75.02 points, or 0.99 percent, to close at 7,495.43, while the broader All Shares index finished 42.30 points down at 4,298.55.

Luis Limlingan of Regina Capital said the devaluation of the yuan affected the local bourse.  “It’s really the devaluation of the yuan,” he said.

Philippine market breadth was negative, with decliners outnumbering advancers, 114 to 44, and 55 issues unchanged. Value turnover reached P7.84 billion, as 2.75 billion shares changed hands.

All counters were in the red, led by the 188.15- point retreat of the industrial sub-index.

Meanwhile, markets around the world fell for a second day on Wednesday, with stocks, the dollar and emerging market currencies all under pressure after China pushed the yuan lower again overnight, boosting the appeal of top-rated government bonds.

The prospect of a US interest rate hike next month dimmed too, which dragged the dollar and US Treasury yields lower. The flip side of that was the fifth consecutive rise in gold prices to a three-week high.

“This is impacting risk assets due to the unpredictability of the Chinese central bank’s action and will have a knock on deflationary impact for China’s big trading partners,” FXpro senior strategist Angus Campbell said.

“Companies that are reliant on revenues from China will be shunned by investors for the second day in a row,” he said.