The local stock market fell after the MSCI index rebalancing as well as due to concern over rising COVID cases.
The main index lost 110.29 points or 1.65 percent to close at 6,556.57 as thr Property and Holding Firms counters led the retreat with only the Mining and Oil sector managing to advance.
Volume surged to 4.16 billion shares worth P18.23 billion with the listing of Monde Nissin shares as losers beat gainers 133 to 66 with 51 unchanged.
“Philippine shares fell after the latest announcement of the MSCI rebalancing results influences active funds to make the necessary adjustments before the close of August,” said Regina Capital Development Corporation Managing Director Luis Limlingan.
The Morgan Stanley Capital International Philippines Index is designed to measure the performance of the large and mid cap segments of the local market.
Stocks are added or removed from an index to ensure that the index is an effective equity benchmark.
Some investment funds follow the composition of the MSCI index thus demand rises for stocks that are freshly added to the index while those recently removed may see some selling.
Limlingan said “Other investors decided to keep in cash ahead of the PSEi rebalancing which takes effect at the end of trading tomorrow.“
Philstocks Financial Senior Supervisor for Research Japhet Tantiangco said “The local bourse plunged as COVID-19 cases in the country continue to surge... The surge in cases raises the risk of extending the strict quarantine measures implemented in selected areas in the Philippines, and expanding it to other areas.”
He added that, net of block sales, trading weakened with net value turnover registering P5.12 billion, below the preceding day’s P6.16 billion. Foreigners were net buyers with net inflows amounting to P50 million.