Philippine Stocks Drop Most in a Month, Capping Quarterly Loss

Philippine stocks fell the most in a month as government officials said a potential U.S. government shutdown may spur market volatility.

SM Investments Corp. sank 4.4 percent, with most of the loss coming in the last minutes of trading. Shopping mall operator SM Prime Holdings Inc. (SM) slid 7 percent. San Miguel (SMC) Corp. pared a rally after $634.8 million of its shares were sold in a block, according to data from the Philippine Stock Exchange.

The Philippine Stock Exchange Index fell 3 percent to 6,191.80 at the close, the most since Aug. 28 and capping a 4.2 percent quarterly loss. Overseas investors sold a net $647.4 million of the nation’s equities today, more than double the previous record outflow, exchange data show.

“The surge in volume was driven by the block transaction in San Miguel,” said Alex Pomento, strategist at Manila unit of Macquarie Group Ltd. “Strip out the San Miguel block transaction and today’s volume isn’t unusual. It’s the quarter end, so some fund managers are squaring their portfolio while sentiment is also weak because of what’s happening in the U.S.”

U.S. Congress is scheduled to meet today to end a stalemate that raises the risk of the first government shutdown in 17 years and threatens talks to increase the debt limit.

Central bank Governor Amando Tetangco and Finance Secretary Cesar Purisima said today concerns over the shutdown will boost volatility.

Block Sale

A total of 368.14 million San Miguel shares changed hands at 75 pesos each in a deal worth 27.6 billion pesos ($634.8 million), exchange data show. San Miguel President Ramon Ang couldn’t be reached in his office for comment and didn’t respond to text messages on his mobile phone.

San Miguel earlier rallied as much as 2.8 percent today after saying it will raise $2 billion from the sale of its stake in Manila Electric Co. (MER) to JG Summit Holdings Inc. (JGS)

Manila Electric, also known as Meralco, surged 4.4 percent, the most in five months. JG Summit fell 1.8 percent, with losses accelerating into the close.

“It’s anyone’s guess if the sale of San Miguel shares was related to the sale of San Miguel’s holdings in Manila Electric,” Pomento said.

Philippine stocks attracted $1.78 billion of net inflow from the start of 2013 through Sept. 27 as accelerating economic growth and two debt rating upgrades to investment status lured foreign investors. The inflow helped push stock valuations to 20.9 times 12-month estimated earnings on May 15, a record based on data compiled by Bloomberg. Shares on the Philippine Stock Exchange Index (PCOMP) are now valued at 16.7 times.

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

To contact the editor responsible for this story: Richard Frost at rfrost4@bloomberg.net

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