PSEi dips below 6,400 after US downgrade

The local bourse tumbled below the 6,400 level on Tuesday after investors had more time to absorb the impact of the United States’ lower credit rating.

The benchmark Philippine Stock Exchange Index (PSEi) was only in the green when it opened, higher by 0.05 percent at 6,458.27.

However, the PSEi spent the rest of the day in the red territory. The index settled at 6,335.33 by the closing bell, down by 1.85 percent, or 119.51 points.

Likewise, the broader All Shares Index lost 1.2 percent, or 45.09 points, to close at 3,720.57.

A total of 1.35 billion shares worth P7.31 billion changed hands, stock exchange data showed.

Luis Limlingan, head of sales at stock brokerage house Regina Capital Development Corp., said investors became more wary on Tuesday “after their initial optimism waned, following Moody’s US downgrade.”

Over the weekend, the credit rating agency cut its rating on the United States to “Aa1” from “Aaa,” representing the first Moody’s downgrade in history. Moody’s cited the ballooning debt of the world’s largest economy in giving a lower rating.

Analysts earlier pointed out that this could result in higher market interest rates in the United States, this making equities less attractive to investors.

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All subsectors were painted red, with the services firms registering the steepest loss.

BDO Unibank Inc. was the most actively traded stock as it shed 1.71 percent to P155.10, followed by International Container Terminal Services Inc., down 3.85 percent to P400; Bank of the Philippine Islands, down 3.53 percent to P131.10; Emperador Inc., down 0.45 percent to P13.40; and Converge ICT Solutions Inc., flat at P20 each.

Losers overpowered gainers, 126 to 62, while 55 companies closed flat.