Philippine shares fell on Wednesday on negative market sentiment after Fitch Ratings unexpectedly downgraded the United States’ credit rating.
The Philippine Stock Exchange index (PSEi) declined by 110.52 points or 1.67% to close at 6,483.28 on Wednesday, while the broader all shares index went down by 52.09 point or 1.48% to 3,463.86.
“Philippine shares along with the whole region plummeted as independent rating agency Fitch cut the rating from the top level of AAA to a notch lower at AA+,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“The announcement comes after US lawmakers waited until the last moment to agree on a debt ceiling deal just this May. While the company Fitch noted steady deterioration in governance over the last 20 years,” Mr. Limlingan added.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message that the local market tracked the decline of other markets following Fitch’s rating action.
Rating agency Fitch on Tuesday downgraded the US government’s top credit rating, a move that drew an angry response from the White House and surprised investors, coming despite the resolution of the debt ceiling crisis two months ago, Reuters reported.
The rating agency first warned the US of the possible downgrade in May and maintained its position last June after the country’s debt ceiling crisis was resolved saying it intended to finalize the review in the third quarter of this year.
Asian stocks and US Treasury yields declined on Wednesday after Fitch’s move.
MSCI’s broadest index of Asia-Pacific shares slid 1.9%. Japan’s Nikkei by 1.8%, while Australian shares tumbled 2.3%.
In early European trades, the pan-region Euro Stoxx 50 futures were down 0.7%. German DAX futures and FTSE futures fell 0.8% and 0.5%, respectively.
Investors counterintuitively fled to the relative safety of sovereign debt from riskier equity markets. Treasuries, whose yields fall when prices rise, were also bought when Standard & Poor’s cut the US’ top “AAA” rating by one notch to “AA-plus” in 2011.
Back home, all sectoral indices fell on Tuesday. Mining and oil plummeted by 208.35 points or 1.98% to 10,272.38; services declined by 30.83 points or 1.94% to 1,553.84; industrials dropped by 164.84 points or 1.78% to 9,070.30; property shed 47.59 points or 1.75% to end at 2,670.95; holding firms decreased by 92.48 points or 1.45% to 6,251.39; and financials went down by 26.01 points or 1.34% to 1,910.87.
Value turnover rose to PHP 4.23 billion on Wednesday with 787.44 million shares changing hands from the PHP 3.96 billion with 804.27 million issues seen on Tuesday.
Decliners widely outnumbered advancers, 154 versus 27, while 47 names closed unchanged.
Net foreign selling went up to PHP 553.02 million on Wednesday from PHP 131.91 million on Tuesday. — A.H. Halili with Reuters
This article originally appeared on bworldonline.com