Political Tumult and Profit-Taking Sink the PSEi on Monday
The benchmark Philippine Stock Exchange Index (PSEi) experienced a significant downturn on Monday, with recent developments in the Senate and widespread profit-taking combining to weigh heavily on the local bourse.
By the closing bell, the main index had tumbled by a sharp 1.78 percent, which translates to a loss of 108.54 points, ultimately ending the trading day at 6,000.32.
This substantial decline in the PSEi was mirrored by the broader market, as the All Shares Index also shed 1.14 percent, or 41.9 points, to conclude the session at 3,643.95.
The day saw intense trading activity, with a total of 2.1 billion shares changing hands, representing a hefty value of P12.12 billion, according to official stock exchange data.
Michael Ricafort, the chief economist at Rizal Commercial Banking Corp., specifically cited “latest political noises, especially at the Senate,” as a key factor contributing to the pronounced market decline.
This political uncertainty was highlighted by the weekend resignation of Senate President Pro Tempore Panfilo Lacson as the chair of the blue ribbon committee, a move reportedly driven by his colleagues’ “disappointment” over the panel’s ongoing probe into anomalous flood control projects.
Such events often trigger investor caution and retreat, directly impacting the PSEi as political stability is a core element of investment confidence.
Inflation Fears Compound Market Weakness
The market’s weakness was not solely attributable to political concerns; it was also compounded by investor apprehension surrounding the imminent release of the September inflation data.
Despite opening the day on a slightly positive note, the market quickly surrendered its gains, settling firmly in the red territory for the remainder of the trading day.
The index’s decline, which pushed the PSEi toward the critical 6,000 support level, came immediately ahead of the much-anticipated release of the September inflation print.
Analysts were already suggesting that this inflation figure may have accelerated beyond expectations, due to compounding factors such as recent storm damage across agricultural regions and the government’s controversial rice import freeze.
Accelerated inflation typically signals tighter monetary policy from the central bank, which can dampen economic activity and reduce corporate earnings, thus making stocks less attractive.
This forward-looking fear of higher inflation combined with the immediate political uncertainty created a powerful negative sentiment wave that swept across the Philippine Stock Exchange.
The sheer breadth of the selling pressure was evident as losers overpowered gainers by a margin of 139 to 64, with only 58 companies managing to close flat, clearly indicating a market-wide retreat from equities as the session ended.
Conglomerates and Banks Lead the Selling Pressure
The heavy selling pressure on the PSEi was most acutely felt among the market’s heavyweights, particularly major conglomerates and large banking institutions, which typically serve as proxies for the overall health of the Philippine economy.
Conglomerates experienced the heaviest bleeding, with notable declines from several key index members. SM Investments Corp. saw its share price drop by 1.74 percent, closing at P732; Ayala Corp. tumbled by 2.53 percent to P477.60; and GT Capital Holdings Inc. slid by 2.44 percent to P579.50.
The banking sector was also hit hard, as evidenced by significant drops: BDO Unibank Inc. was down 1.81 percent to P135.50, and Bank of the Philippine Islands lost a considerable 3.89 percent, settling at P108.60 each.
Real estate was not spared, with Ayala Land Inc. declining by 2.89 percent to P23.50.
Interestingly, International Container Terminal Services Inc. was the most actively traded stock of the day, yet it still lost 0.78 percent to P508 per share, suggesting high turnover was accompanied by net selling.
This concentrated loss among the most capitalized stocks explains the steep fall of the benchmark PSEi and highlights that the profit-taking and uncertainty were not confined to small-cap or mid-cap stocks but were impacting the core pillars of the market.
The broad sell-off reflects a defensive stance taken by investors, who are opting to liquidate holdings amid the confluence of domestic political instability and rising macroeconomic risks.
