Stocks resume fall after calls for hard lockdown

Published July 28, 2021, 5:42 PM

by James A. Loyola

After a single day bounce, Philippine share prices weakened again amid calls for a hard lockdown to prevent a surge that may be fuelled by the Delta variant.

The main index lost 49.55 points or 0.76 percent to close at 6,473.03 as banks and Industrials led the drop across the board.

Volume was still low at 1.08 billion shares worth P4.49 billion as losers beat gainers 144 to 44 with 37 unchanged.

Philstocks Financial Research and Engagement Officer Claire Alviar said “The local bourse dropped due to the threat of the Delta Variant amid a weak rally yesterday. Also, investors took cues on the performance of the US markets overnight.”

She noted that, “OCTA Research warns of a surge in Metro Manila while the DOH acknowledged the increase in Covid-19 infections. This affects investors’ sentiment towards the market as the possibility of placing the NCR under stricter lockdown measures is rising.”

In addition, Alviar said the IMF’s lower GDP growth forecast for the ASEAN-5 and the Oxford Economics’ expectation that the Philippines would suffer the worst economic scarring in the Asia Pacific, weighed on the sentiment.

AAA Equities Head of Research Chris said “Local equities gave up some of its gains from the previous trading session as investors are still on edge about the health crisis.”

He added that, “Prevalent fears of a hard lockdown, (which some believe is necessary to prevent a massive outbreak which were seen in Indonesia, India, and Thailand), is driving investors to downsize their portfolios and keep others from picking up the cheap shares.”

Mangun explained that, “It is mainly the lack of demand for shares that is keeping prices depressed, evident in the daily trading turnover of just above P4 billion for the last two weeks. This is two-thirds of the average daily trading of P6 billion.”

Regina Capital Development Corporation Managing Director Luis Limlingan said “Philippine shares fell again as the Chinese regulatory crackdown dampened the sentiment. It comes after the massive selloff in HSI.”

He added that, “China’s ongoing regulatory crackdown would likely continue weighing on Asian bourses, led by education, online finance, e-commerce, and property stocks—sectors currently heavily scrutinized.”