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Asia300

US rate hike, China woes halt six-year bull run

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Filipino dealers and traders cheer during the last day of trading inside the Philippine Stock Exchange (PSE) in Makati city, metro Manila December 29, 2015.   © Reuters

MANILA -- Philippine share prices ended the year in the red on Tuesday, marking their first annual drop since the height of the global financial crisis in 2008.

The benchmark Philippine Stock Exchange index fell 3.9% to 6,952.08 points on Dec. 29 from a year ago, ending six consecutive years of gains.

With an improving economy and a strengthening labor market, the U.S. Federal Reserve on Dec. 16 finally pushed through with the first interest rate increase in nearly a decade. The anticipation of the actual "lift-off" had triggered a capital flight from emerging markets this year. Closer to home, China's cooling economy worsened investor sentiment.

The PSEi peaked at 8,127.47 points on April 10, before the developments in the world's two largest economies wiped out gains.

Indonesia and Thailand's respective benchmark stock indices are also poised to end lower on Wednesday, while Malaysia is also trading in the red ahead of the last trading day on Dec. 31.

Some Philippine blue-chip companies that form part of Nikkei Asian Review's A300 listings were among the hardest hit.

Bloomberry Resorts, which operates a big casino in Manila, plunged 63% this year, joining regional gaming stocks battered by China's crackdown on its high-rollers. International Container Terminal Services, which runs ports in 20 countries, lost 39% on disappointing earnings and concerns over its exposure to volatile global currency, said Lexter Azurin, research head at Unicapital Securities.

Philippine Long Distance Telephone, which used to be the nation's largest company by market cap, before being overtaken by SM Investments, slid 29% as it struggled to regain lost market share to rival Globe Telecom of Philippines' Ayala Corp. and Singapore Telecommunications.

San Miguel declined 32% as its high exposure to foreign-currency denominated debts remained a concern for investors as the U.S. dollar continued to strengthen, according to Luis Limlingan, managing director at Regina Capital Development. The company has stepped up borrowings in recent years to bankroll its expansion into infrastructure and power generation, as it moved away from food and beverage.

GT Capital Holdings, meanwhile, led the biggest gainers, ending the year 28% higher as its earnings from power generation and car dealership businesses increased. SM Prime Holdings, the nation's biggest property developer by market value, jumped 27%, as it continued to open new shopping centers. Manila Electric, the largest power retailer, meanwhile, climbed 25% as the booming economy propped up energy consumption.

PSE is expecting to see capital-raisings of roughly 200 billion pesos ($4.5 billion pesos) next year, up from 185 billion pesos this year. The exchange is pinning its hopes on several companies which pushed back initial public offerings to 2016 to avoid a weak market, bourse CEO Hans Sicat told reporters two weeks ago.

The pace of the U.S. interest rate increase is likely to fuel market volatility next year, and the Philippine presidential elections in May could sideline investors, according to analysts. But Sicat said sound macroeconomic fundamentals will support a recovery in the Philippine stock market. 

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