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Stocks slump; SM Prime, Ayala fall

The stock market sank Friday after investors cashed in on their gains ahead of next week’s shortened trading to make way for the three-day meeting of the Association of Southeast Asian Nations.

The Philippine Stock Exchange Index dropped 86.34 points, or 1 percent, to 8,433.48  on a value turnover of P7.53 billion. Losers overwhelmed gainers, 134 to 73, with 44 issues unchanged.

SM Prime Holdings Inc. of retail tycoon Henry Sy Sr. fell 3.6 percent to P36.60, while Macro Asia Corp., an aviation services company controlled by airline and tobacco tycoon Lucio Tan, slumped 7 percent to P22.30 on profit-taking.

Conglomerate Ayala Corp. lost 1.9 percent to P1,050, while unit Ayala Land Inc. dipped 1.4 percent to P43.80.

The rest of Asian markets mostly fell on Friday as traders fret over the outlook for Donald Trump’s much-vaunted tax-cut plans while profit-takers cashed in after the latest rally.

However, Hong Kong and Shanghai bounced from early losses to sit in positive territory as investors welcomed news that China would further open its financial sector to foreign firms.

The losses followed a broad retreat on Thursday, which started when Tokyo’s Nikkei saw a two percent gain in the morning reverse to a 1.7 percent loss at one point.

While investors will be keeping an eye on a meeting of Asia-Pacific leaders, including Donald Trump and Xi Jinping, in Vietnam this weekend their main focus is on Washington, where Republican lawmakers are struggling to agree on a fiscal reform bill.

The uncertainty has dug into the dollar, sending it down against its major peers, particularly the yen, which has hurt Japanese exporters. By lunch in Tokyo the Nikkei was down 1.4 percent, having chalked up a 26-year high earlier in the week.

Other markets were also in the red, with Sydney and Seoul each shedding 0.3 percent and Singapore 0.1 percent. Wellington, Taipei, Bangkok and Jakarta also suffered. 

Global markets were sent surging last month when Trump’s administration unveiled a plan to slash taxes across the board in a bid to fire up the US economy.

But in recent days it has emerged Republicans have differing ideas about how to push them through, with senators calling for a one-year delay to corporate tax cuts, among other things.

“The delayed phase-in of the corporate tax cut, an increase in the repatriation tax, as well as other walk-backs... have knocked stocks in the US and across the globe lower,” said Greg McKenna, chief market strategist at AxiTrader.

House Speaker Paul Ryan insisted the details will be “ironed out” between the two competing plans but analysts said there are worries the overhaul could succumb to party infighting in the same way Trump’s healthcare reforms were killed.

“Given the apparent differences between the two bills, the implementation of tax reform before the end of the year looks pretty challenging and achieving it before Thanksgiving (November 23rd) seems close to impossible,” said Rodrigo Catril, FX Strategist at National Australia Bank, in a commentary.

 

Topics: stock market , Philippine Stock Exchange Index , SM Prime Holdings Inc. , Henry Sy Sr. , Macro Asia Corp. , Lucio Tan , , Ayala Corp
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