Philippine stocks fell, dragging the benchmark index to its biggest loss in almost seven weeks, after valuations climbed to a record.
The Philippine Stock Exchange Index (PCOMP) slid 1.2 percent to 6,644 as of 11:33 a.m. Manila time, poised for the sharpest loss since Jan. 10. Ayala Land Inc., the nation’s largest developer, and Jollibee Foods Corp. (JFC), the biggest Philippine restaurant operator, slid more than 2 percent.
The benchmark index climbed 16 percent this year to a record yesterday amid speculation accelerating economic growth will win the nation an investment-grade credit rating in coming months. Valuations climbed to 18.9 times projected 12-month profit yesterday, the highest based on data compiled by Bloomberg going back to 2006 and 42 percent above the seven-year daily average.
“The market is ripe for a correction with sky-high valuations,” James Lago, head of research at PCCI Securities Brokers Corp., said by phone today. “Sentiment also turned negative because of the elections in Italy. If Italy goes haywire, fear of Europe’s debt crisis will shoot up again.”
The iShares MSCI Emerging Markets Index exchange-traded fund sank 1.3 percent yesterday to an 11-week low as an inconclusive Italian election result renewed concerns over Europe’s debt crisis. Italy may need a second election after the four-way race looked to result in a divided parliament that would challenge the European Union’s embrace of austerity.
Ayala Land fell 2.6 percent. Jollibee sank 2.6 percent, snapping a seven-day rally. Ayala Land trades for 39.2 times 12- month projected earnings, while Jollibee is valued at a multiple of 30.5, data compiled by Bloomberg show.
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