Shares decline further on bank failure concerns

LOCAL EQUITIES dropped on Tuesday due to lingering negative sentiment and contagion fears after the failure of two US banks.

The benchmark Philippine Stock Exchange index (PSEi) declined by 151.12 points or 2.3% to end at 6,393.33 on Tuesday, while the broader all shares index went down by 64.35 points or 1.82% to close at 3,454.48.

“Philippine shares fell below the 6,500 support as investors bet the collapse at Silicon Valley Bank could be the start of more banking headwinds in the US,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message on Tuesday.

Last week, California banking regulators closed Silicon Valley Bank and appointed the Federal Deposit Insurance Corp. as receiver for later disposition of its assets. New York’s Signature Bank was also closed over the weekend.

The US Federal Reserve said it would make additional funding available through a new “Bank Term Funding Program,” which would offer loans up to one year to depository institutions, backed by Treasuries and other assets these institutions hold.

The market turmoil from the collapse led investors to speculate the Fed will no longer raise interest rates by 50 basis points next week.

“The market was sharply down on investors’ worries that the Fed’s bank rescue plan may be inadequate in restoring public confidence and curbing contagion fears,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in an e-mail on Tuesday.

“This Tuesday, the local bourse plunged amid concerns over the Silicon Valley Bank’s collapse. Currently, investor sentiment was negative given the situation, especially ahead of the interest rate decision of the Federal Reserve,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said.

Back home, all sectoral indices closed lower on Tuesday. Holding firms dropped by 158.47 points or 2.51% to 6,141.51; property declined by 59.72 points or 2.13% to 2,735.01; industrials lost 201.28 points or 2.11% to end at 9,310.51; services fell by 31.50 points or 1.95% to 1,579.12; financials went down by 33.42 points or 1.85% to 1,764.71; and mining and oil gave up 89.78 points or 0.83% to end at 10,607.68.

Value turnover went down to PHP 6.78 billion on Tuesday with 968.01 million shares changing hands from the PHP 25.53 billion with 913.52 million issues traded on Monday.

Decliners outnumbered advancers, 143 versus 49, while 47 names closed unchanged on Tuesday.

Net foreign selling declined to PHP 1.05 billion on Tuesday from the PHP 21.15 billion seen on Monday.

Regina Capital’s Mr. Limlingan said investors are waiting for February US consumer inflation data to be released overnight for more leads.

He placed the PSEi’s immediate support level at 6,350 and resistance at 6,500. — A.E.O. Jose