PH shares fall ahead of MSCI rebalancing

Philippine shares declined on Tuesday as investors positioned ahead of the Morgan Stanley Capital International (MSCI) rebalancing and await the passage of the US debt ceiling bill.

The Philippine Stock Exchange index (PSEi) fell by 82.49 points or 1.25% to close at 6,510.67 on Tuesday, while the broader all shares index went down by 35.36 points or 1% to end at 3,475.05.

“The index was dragged down by foreign selling as various institutional investors rebalanced portfolios ahead of the effectivity of MSCI adjustments and with the trading month drawing to a close,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said.

“The PSEi is again critically hovering above its 6,500 support, which could mean a potentially volatile session tomorrow on the back of last-minute window dressing,” Mr. Colet added.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said that shares fell on Tuesday amid continued uncertainty over the US debt limit deal.

“Despite [Monday’s] cheer over the prospect that the world’s largest economy will avert a major debt default, markets are not out of the woods yet. Although an agreement had been reached “in principle,” it came just as lawmakers were hitting the road for the Memorial Day holiday in the US and are not expected to return until June 4,” Mr. Arce added.

Over the weekend, US President Joseph Biden and House Speaker Kevin McCarthy reached a tentative deal to suspend the USD 31.4-trillion debt ceiling until January 1, 2025, and would be ready for voting in Congress, Reuters reported.

If approved, the deal will prevent the US government from defaulting on its debt and comes after weeks of heated negotiations between Mr.  Biden and House Republicans.

It still needs to pass through a narrowly divided Congress before June 5, when the US Treasury says it would run short of money to cover all of its obligations.

The agreement would suspend the debt limit through January 1, 2025, cap spending in the 2024 and 2025 budgets, claw back unused COVID funds, speed up the permitting process for some energy projects, and include extra work requirements for food aid programs for poor Americans.

Back home, all sectoral indices closed lower on Tuesday. Mining and oil decreased by 205.28 points or 2.01% to 9,963.43; industrials fell by 146.31 points or 1.56% to 9,230.80; financials shed 24.26 points or 1.32% to end at 1,804; services dropped by 20.04 points or 1.29% to 1,533.62; holding firms went down by 69.10 points or 1.05% to 6,503.04; and property declined by 24.88 points or 0.91% to 2,704.61.

Value turnover rose to PHP 4.46 billion on Tuesday with 1.11 billion shares changing hands from PHP 3.29 billion on Monday with 599.74 million issues traded on Friday.

Decliners outnumbered advancers, 127 versus 42, while 43 names closed unchanged.

Net foreign selling stood at PHP 85.53 million on Tuesday versus the PHP 143.21 million in net buying seen on Monday. — By A.H. Halili with Reuters