Manila, Philippines – The Philippine Stock Exchange Index fell further today. The index closed at 7221.23 — lower by 65.11 points or 0.89 percent.
The broader all-share index is lower by 0.76 percent.
The drop was across the board, with all sub-indices closing low. The worst performing sector is the Mining and Oil sector, which fell by 2.66 percent. It is followed by the Financial sector, with a 1.61 percent drop.
Within the Financial sector, BPI led the sub-index lower as it closed at 79.50. This figure is lower by 3.17 percent versus yesterday’s close.
Moreover, SECB closed at 169.00, which is lower by 3.43 percent. MBT closed at 64.90, dropping at 1.67 percent. RCB closed at 175.00 — a fall of 0.57 percent.
Within the Mining and Oil sector, SCC led the sub-index lower as it closed at 27.00. It is lower by 3.23 percent versus yesterday’s close.
Meanwhile, PX closed at 3.51, with a 6.65 percent fall. PXP closed at 15.50, which is lower by 1.15 percent. AT closed at 3.16, a fall of 3.36 percent.
Gainers and Losers of the Day
The most active stocks today include BPI with PHP 396.780 million in traded value. MBT made it to the top gainers with a traded value of PHP 362.33 million. AC also had PHP 350.53 million in traded value.
Significant gainers for the day include TECH, which is higher by 27.19 percent; H2O, by 5.71 percent; CNPF, by 3.79 percent; DD, by 3.55 percent; and, RCI, by 2.71 percent.
On the other hand, the notable losers include IDC, which was down by 14.67 percent; ORE, by 12.50 percent; WIN, by 11.67 percent; and, FOOD, by 7.75 percent.
Joining the D-listers were BCOR with a drop of 7.04 percent; FOOD, by 10.92 percent; IRC, by 7.17 percent; and, PX, by 6.65 percent.
There were 36 advances and 153 declines, while 41 names remain unchanged. Value turnover totaled PHP 5.27 billion. Foreign exchange rate stood at USD 1: PHP 54.07.
Government Assures Arsenal to Combat Inflation
Economic managers assured that the country is ready to face headwinds from inflation and the devaluation of the Philippine Peso. They said that the state has the tools needed for these temporary challenges.
Finance Secretary Carlos G. Dominguez III said in a press conference that the country could “face temporary adversity” confidently.
Dominguez reiterated that the people should take a broader perspective of the country’s situation in the long run when it comes to elevated inflation. They should also consider the twin deficits of budget shortfalls and current account deficits, the secretary added.
The Philippines has already booked a PHP 154.50 billion deficit for the first half of the year. This figure is a 28 percent rise versus the same period last year.
The recorded deficit has also exceeded by 7 percent of the PHP 143.8 billion target. Adding July, it further widened to PHP 279.40 billion, which is 36 percent of the first seven months of 2017.
A senior central bank official hints another rate hike in benchmark interest rates as inflation reaches nearly a 10-year high at 6.4 percent last August. The BSP has already increased rates cumulatively of around 100 basis points in the past three meetings.
The Monetary Board is set to meet on September 27. Analysts expect a 25-50 basis point hike.
About the weakness of the Peso, BSP Deputy Governor Diwa C. Guinigundo said that the currency should ease by the end of the year. It is possible with the outpour of the OFW and Business Process Outsourcing (BPOs) remittances.
Historically, the Peso is at its strongest during December because OFWs remit more than usual during the holiday season.
PT&T to Start Debt-to-Equity Conversion
In a bid to be the third telco, PT&T is set to start the debt-to-equity conversion arrangement. This plan is in line with its exit from the corporate rehabilitation proceedings as granted by the Makati City Regional Trial Court.
Debt-to-equity conversion is a remedy for debt-stricken companies, as seen by the companies themselves. Instead of paying the debt back, the company would turn the creditors to shareholders of the company should they agree to it.
This transition would then wipe out the debt but would put existing shareholders at a disadvantage because of dilution.
PT&T will increase its authorized capital stock to PHP 10,187,150,000 and will issue serial, cumulative, convertible, and redeemable preferred shares to facilitate the debt-to-equity conversion.
The authorized capital stock would be composed of:
- 1,387,150 common shares at a par value of PHP 1.00
- 7.5 million serial cumulative convertible redeemable preferred shares with a par value of PHP 10000
- 8.8 billion serial redeemable preferred shares at PHP 1.00 par value
This conversion would allow PT&T to wipe out its PHP 8 billion debt. The company exerts effort to exit its corporate rehabilitation so that it could resume Philippine Stock Market trading and participate in the bid to become the third telco.
PT&T was once PLDT’s most prominent rival. However, it got buried in debt, which led to the company’s voluntary suspension of trading in 2004.
Index Breaks Support
The index broke our immediate support today. The 20 SMA is nearing completion of its bearish crossover with the 50 SMA.
MACD is bearish. RSI is also bearish and has reached oversold levels. Estimated support is at 7191 while expected resistance is at 7247.
Foreign Fund Flow
PSEi registered a Net Foreign Selling worth P636,469,126.34 as of September 19, 2018. On a 30-day trading period, PSEi is on a Net Foreign Selling worth PHP13,941,532,524.70.
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