Philippine stocks slump most in Asia as foreign selloff deepens

By Ian Sayson, Bloomberg, 2016-10-28

Philippine stocks headed for their worst month in more than a year as investors flee a market that was flying high three months ago.

The Philippine Stock Exchange Index sank 1.5 percent to 7,337.29 as of 12 p.m. in Manila, its seventh straight day of declines. Losses this month extended to 3.9 percent as a selloff by foreign funds accelerates. The measure led declines in Asian emerging equities on Friday as investors assess the outlook for the U.S. presidential election and higher Federal Reserve interest rates.

Initial euphoria over President Rodrigo Duterte’s election victory in May drove the benchmark index to a 15-month high in July amid bets he could speed one of the fastest economic growth rates in Asia. That optimism has since dissipated amid high valuations and Duterte’s fiery outbursts and foreign policy pivot away from the U.S. Philippine shares may fall further and could test 7,200, according to Malayan Bank.

“Investors have turned generally cautious, especially overseas funds,” said Andrew Inovero, a trust officer at Malayan Bank in Manila. “We have seen a lot of selling because the political rhetoric has worried the market, especially foreign investors. Earnings have also not been as spectacular as many analysts expected with some disappointments.”

The Philippine stock index has retreated 9.4 percent from its July peak. Overseas investors pulled money for a fourth straight day Thursday, bringing this month’s withdrawal to $81 million. International investors sold a net $273 million in September, the largest monthly outflow in a year. Financial markets will be closed Monday and Tuesday for public holidays.

Metropolitan Bank & Trust Co. sank 4.1 percent on Friday after posting a drop in third-quarter earnings. The stock is one of the biggest drags on the benchmark gauge. Valuations on the benchmark share measure are at 17.3 times 12-month estimated earnings, compared with almost 20 in July, according to data compiled by Bloomberg.