US credit downgrade spooks investors

News of Moody’s downgrading the United States’ credit rating for the first time in history upset investors at the local bourse on Monday.

While it had opened positively, the benchmark Philippine Stock Exchange Index (PSEi) settled at 6,454.84 by the closing bell, down 0.17 percent, or 10.69 points.

Likewise, the broader All Shares Index shed 0.1 percent, or 3.71 points, to close at 3,765.66.

A total of 755.1 million shares worth P6.2 billion changed hands, stock exchange data showed.

Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said the decline reflected “the market’s tepid reaction” to the credit rating downgrade.

“While the downgrade itself was not a surprise, investors are waiting to see whether the move triggers a more adverse movement in US Treasury yields that could potentially unsettle equity markets,“ Colet said.

Japhet Tantiangco, research head at Philstocks Financial Inc., pointed out that the downgrade could result in higher market interest rates in the US, thus making equities less attractive to investors.

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Property firms registered the steepest loss, while services and mining and oil firms gained the most.

International Container Terminal Services Inc. was the most actively traded stock as it added 1.46 percent to P416 each, followed by BDO Unibank Inc., down 1.62 percent to P157.80; Emperador Inc., down 0.44 percent to P13.46; Ayala Corp., down 1.7 percent to P550.50; and Ayala Land Inc., down 2.14 percent to P22.90 each.

Others were JG Summit Holdings Inc., which surged by 13.33 percent to P20.40 following news about plans to invest more in airports.