The market ended flat today. The index closed at 8013.42, lower by 10.72 points or 0.13 percent. The broader all share index was higher by 0.04 percent.
Sub-indices were mixed today. The Industrial and Holdings sectors were down for the day while the Financials, Mining and Oil, Service and Property sectors closed higher today. The best performing sector is the Mining and Oil space rising by 0.89 percent. On the other hand, the Industrial sector performed worst, dropping by 0.67 percent.
Within the Mining and Oil sector, PX led the sub-index higher as it closed at 4.21, which was higher by 4.73 percent versus yesterday’s close. PXP closed at 15.92, higher by2.05 percent. NIKL closed at 2.49, higher by 1.22 percent. SCC closed at 24.10, flat for the day.
Within the Industrial sector, JFC led the sub-index lower as it closed at 315.00, which was lower by 2.78 percent versus yesterday’s close. EMP closed at 7.30, lower by 2.54 percent. MER closed at 396.00, lower by 0.50 percent. PIZZA closed at 12.78, lower by 3.18 percent.
Which Stocks Traded the Largest Volume?
The most active stocks today include ALI with PHP 672.34 million in traded value. SM also made it to the top gainers with a traded value of PHP 395.30 million. BDO also had PHP 346.76 million in traded value.
Gainers and Losers for the Day
Significant gainers include CEI, higher by 10.20 percent, OPMB by 7.69 percent, NOW by 5.53 percent, IMI by 5.28 percent, and LPZ by 4.99 percent.
Significant losers include ABG by 4.27 percent, PRMX by 3.53 percent, and PIZZA by 3.18 percent.
Market Breadth
There were 102 advances, 86 declines, while 63 names remain unchanged. Value turnover totaled PHP 6.06 billion. Foreign exchange rate stood at USD 1:PHP 52.26.
Possible Credit Risk from Hanjin Default
Philippine banks are at risk of having a ratings downgrade as it faces a huge loan exposure to Hanjin Heavy Industries, Moody’s Investor said. Moody’s is a credit rating agency that assess risk from certain instruments as well as risk in investing in certain companies or sovereign authorities. It said that credit cost might be as high as USD 412 million. Hanjin has filed for corporate rehabilitation last week.
The banks in highlight are Rizal Commercial Banking Corp. (RCBC), state-owned Land Bank of the Philippines (LANDBANK), Metropolitan Bank & Trust Co. (Metrobank), Bank of the Philippine Islands (BPI) and BDO Unibank, Inc.
Currently, the banks have a rating of “Baa2” which is one notch higher than the minimum investment grade. This is also the same rating granted to the Philippine government which gave the country to borrow money with lesser cost.
The breakdown of the debt are as follows: BPI and BDO USD 60 million each, Landbank USD 80 million, Metrobank USD 72 million, and RCBC USD 140 million. The biggest impact is seen with RCBC as the size of the bank is smaller but the exposure is bigger. The effect of the default would increase the banks bad loan ratio from 2.2 percent in 2017 to 4.3 percent which is almost double. The effect on the other banks are small which will range from 0.15-0.50 percent.
A possible correction
The index registered a doji today after a strong bull run. This may suggest a possible short term reversal. Nonetheless, moving averages are still bullishly aligned with the 15 EMA and 20 SMA as immediate support. MACD is also bullish. RSI is flattening at overbought levels. Support is estimated at 7889 while resistance is expected at 8024.
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