PHILIPPINE SHARES dropped on Thursday as investors remained cautious while awaiting the passage of the bill seeking to suspend the US debt ceiling until 2025.
The Philippine Stock Exchange index (PSEi) fell by 46.78 points or 0.72% to close at 6,430.58 on Thursday, while the broader all shares index went down by 14.45 points or 0.41% to end at 3,443.85.
“Philippine equities fell again as investors kept an eye on the federal debt ceiling debate in Washington in the final trading day of May. The measure passed a key procedural hurdle in the House on Wednesday, clearing its path to a final vote on the floor later in the evening,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“Congress is rushing to approve the measure by Monday, the earliest date the US risks a sovereign default,” Mr. Limlingan added.
Philstocks Financial, Inc. Research Analyst Claire T. Alviar likewise said in a Viber message that the PSEi tracked Wall Street’s decline amid caution in the market due to the debt limit deal.
“Moreover, foreigners continued exiting the bourse pulling down the market further,” Ms. Alviar said.
A divided US House of Representatives passed a bill to suspend the USD 31.4-trillion debt ceiling on Wednesday, with majority support from both Democrats and Republicans to overcome opposition led by hardline conservatives and avoid a catastrophic default, Reuters reported.
The Republican-controlled House voted 314-117 to send the legislation to the Senate, which must enact the measure and get it to US President Joseph R. Biden’s desk before a Monday deadline, when the federal government is expected to run out of money to pay its bills.
The legislation suspends — in essence, temporarily removes — the federal government’s borrowing limit through Jan. 1, 2025. The timeline allows Mr. Biden and Congress to set aside the politically risky issue until after the November 2024 presidential election.
It would also cap some government spending over the next two years, speed up the permitting process for certain energy projects, claw back unused COVID-19 funds, and expand work requirements for food aid programs to additional recipients.
Back home, sectoral indices were split on Thursday. Services increased by 10.25 points or 0.67% to 1,528.19; mining and oil rose by 32.14 points or 0.32% to 9,996.92; and financials inched up by 0.45 points or 0.02% to 1,812.46.
Meanwhile, holding firms went down by 108.52 points or 1.67% to 6,381.74; property declined by 22.64 points or 0.85% to 2,631.51; and industrials fell by 50.39 points or 0.54% to 9,150.93.
Value turnover declined to PHP 5.41 billion on Thursday with 801.27 million shares changing hands from the PHP 24.54 billion with 2.27 billion issues traded on Wednesday.
Decliners outnumbered advancers, 105 versus 78, while 50 names closed unchanged.
Net foreign selling dropped to PHP 475.68 million on Thursday from PHP 4.15 billion on Wednesday. — A.H. Halili with Reuters