Philippine Daily Inquirer
12:48 pm | Wednesday, August 28th, 2013
MANILA, Philippines–Local stocks succumbed to another day of bloodbath on Wednesday as rising global oil prices triggered by the tension in the Middle East further dampened sentiment on emerging markets.
The main-share Philippine Stock Exchange index lost 311.16 points or 5.26 percent to 5,605.83 in morning trade amid a regional downturn.
“The brewing conflict in the Middle East and the spike in oil prices fueled the sell-off. Most markets are down as well. Everyone is racing to the exits,” said fund manager Astro del Castillo of First Grade Finance.
The U.S. plans to take action against Syria which was accused of using chemical weapons against its citizens.
“We believe 5,500 major support can hold based on ‘safety net’ provided by robust Philippine macro fundamentals anchored on strong and sustainable GDP (gross domestic product), low inflation, positive current account, low budget deficit and public debt, etc. – all these coupled with healthy earnings growth will provide solid support for PSEi,” said veteran stock broker Ismael Cruz, president of IGC Securities.
“The sell-off also brings down our valuation levels to a more attractive P/E (price to earnings ratio) of 15x in line with our historic valuation, mind you (at) pre-investment grade” Cruz said.
A P/E ratio of 15x means investors are paying 15 times the amount of money they expect to make in this market for this year.
“It is unfortunate Philippines is being lumped together with other deteriorating ASEAN (Association of Southeast Asian Nations) brothers. It’s now our turn to rise and shine,” Cruz said.
The most battered stocks in morning trade was SMIC (-9.93 percent), which is likewise affected by the portfolio realignment of fund managers following a cut in its weight on the MSCI index. Investors also dumped shares of EDC, ALI, Belle, Semirara, JG Summit, AGI, Bloomberry, Ayala Corp. and SM Prime.
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