Philippine Stocks Drop Most in Asia on Valuations: Manila Mover

Philippine stocks fell for a seventh day, sending the benchmark index towards its longest losing streak since November 2011.

The Philippine Stock Exchange Index (PCOMP) sank 1.6 percent to 6,430.90 at 10:45 a.m. in Manila, the biggest loss among Asian markets. Philippine National Bank slid 2.9 percent after the company reported a drop in net income last year. Bloomberry Resorts Corp. dropped to the lowest level in six weeks.

Shares in the Philippine stock index are valued at 18.6 times projected 12-month earnings. The multiple was at 19.5 on March 11, the highest level dating back to at least 2006, according to data compiled by Bloomberg. The MSCI Emerging Markets Index trades at 10.5 times.

“The drop in Philippine equities is exaggerated by valuations that continue to be be elevated,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. “Investors are waiting for reasonable levels to come in which should be between 6,000 and 6,200. There is no new fundamental story domestically and the global risk has changed with the development in Cyprus.”

The benchmark measure has fallen 5.6 percent during its seven-day slide, paring this year’s gains to 11 percent. The shares have risen this year on expectations the nation will win an investment-grade sovereign rating, interest rates will stay low and economic growth will accelerate.

Euro-area finance ministers told Cyprus to raise 5.8 billion euros ($7.5 billion) from bank depositors to unlock emergency loans, maintaining the revenue target while suggesting sparing small-scale savers.

“Foreigners aren’t around because of the risk scenario triggered by the situation in Cyprus while locals are taking money away in anticipation of the shortened trading next week,” said Rico Gomez, who helps manage $2.8 billion at Rizal Commercial Banking Corp.

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net