Bomb scare sends peso, stock market in tailspin

The rash of bombings in Metro Manila, with the latest one at the SM Megamall last Sunday, sent shock waves through the local financial markets yesterday, sending the stock market and the peso in a tailspin.

At the Philippine Stock Exchange, the 30-company composite index plunged by 66.59 points -- its lowest finish since Oct. 15,1998 and its biggest single-day percentage drop in almost three months-- due mainly to broad-based selloff, while the peso plummeted to nearly 42 to the dollar to close at 41.915 or 24. 50 centavos lower from Friday's close of 41.670 to the dollar.

Foreign exchange traders said investors are buying dollars heavily in anticipation that the local currency could lose more value in the wake of a bomb scare that has gripped Metro Manila.

They said the peso was already trading at 42.01 to the dollar at the black market, or outside of the Philippine Dealing System.

"The outlook for the peso is very gloomy, especially after the incident at Megamall on Sunday," a trader from a local bank said. "The bombing has triggered a discomfort among a lot of people, that is why they are shifting to dollars. Its the retail demand that is pushing the peso down."

The peso hit a low of 41.920 and a high of 42.730 to the dollar. its weighted average stood at 41.801 or 11.90 centavos lower than Friday's average of 41.682 to the dollar.

At the PSE, the broad-based selling was led by blue chip stocks Philippine Long Distance Telephone Co. (PLDT), San Miguel, Metrobank, Ayala Land, Bank of the Philippine Islands and mall operator SM Prime Holdings, which lost ground after the fatal bomb blast inside the sprawling SM Megamall in Mandaluyong City last Sunday.

Wise Securities research head Jose Vistan said a confluence of concerns such as poor corporate earnings, prospects of weak economic performance in the first quarter, the spate of bombings, rising interest rates and a weaker peso dragged down the market.

"After a steep drop like this there is usually a technical bounce," said Vistan. "But the bias is still for a downtrend."

The bearish mood was felt in all counters, hitting the property board hardest. Declining stocks swamped gainers, 105 to only eight, while 20 issues were unchanged.

SM Prime lost 35 centavos to P4.50 after Sunday's bombing, the second explosion to rock the metropolis within a week. Last Wednesday, the upscale Glorietta complex in Makati City was bombed. Its owner and operator Ayala Land also fell 30 centavos to P4.40.

Among the stocks that defied the downtrend were Negros Navigation, Universal Rightfield, Wellex Industries, Manulife Financial, Mabuhay Vinyl, RFM, ICTSI and Reynolds Philippines which all managed to chalk up meager gains.

A total of 2.693 billion shares changed hands yesterday, with total market value plunging back below the P1 billion mark at P935.29 million.

PLDT fell P25 to P670 in parallel with the weakness in its New York stocks. Foreign-heavy "B" shares of Meralco and San Miguel, likewise, retreated as foreign net selling continued to affect the local market.

There have been estimates that as much as $3 billion in portfolio or equities investments have fled the country in the four months this year as investors shift their funds to other money instruments in other countries such as the US where interest rates are climbing. At the PSE, foreign net selling has aggregated to P6.3 billion so far this year.