MANILA, Philippines - Philippine stocks recovered yesterday after Monday’s bloodbath as share prices tracked the slight rebound of markets across the region.
At the Philippine Dealing System, the peso also managed to regain some lost ground, closing 20.5 centavos higher at 46.610 from Monday’s 46.815 to $1.
The benchmark Philippine Stock Exchange index (PSEi) regained 39.33 points of the nearly 490 points it had lost Monday to settle at 6,830.34 while the broader All-Shares index gained 14.62 points or 0.37 percent to finish at 3,896.32.
Most indices also recovered except for the services and mining and oil indices, which were still in negative territory.
Yesterday’s recovery followed Monday rout when the PSEi nosedived by nearly 490 points to settle at its lowest level in more than two years at 6,791.01.
Global markets have been falling the past two weeks when China said it would devalue its yuan to boost exports and fuel the economy.
Astro del Castillo, First Grade Finance Inc. managing director said yesterday’s recovery was expected after Monday’s slump.
Analysts said the recovery of other Asian stocks after the massive global selloff on Monday was also expected.
“There was no clear catalyst for the global stock meltdown. The lack of clarity makes it difficult to assess what is needed to stem the rout,” analyst Bernard Aw of IG Markets was quoted as saying, in his report on Asian stocks.
Still, the Chinese stocks continued to send jitters across the region.
The benchmark Shanghai Composite index closed lower by 244.94 points to close at 2,964.97, its lowest since December 15 last year.
In Tokyo, for instance, the benchmark Nikkei 225 index reversed early gains before falling nearly four percent yesterday.
Philippine Stock Exchange (PSE) president Hans Sicat, however, assured investors the country’s fundamentals remain strong.
“We do not think that growth will reverse easily,” Sicat said.
Justino Calaycay of Accord Capital said the economy is not in a recession and that it is still growing. “We are not in recession,” he said.
A nearly five hour trading halt occurred at the local bourse yesterday but the PSE said there was no deliberate effort to put the brakes on yesterday’s trading after the huge drop in Philippine stocks on Monday.
Sicat said the trading halt, the third time this month, was due to a technical glitch.
“The halt had nothing to do with how the markets are moving. The exchange does not intervene in how the market performs,” he said.
Sicat said the basic issue is not the core trading engine itself. “The core trading engine is fine. The issue is what you might call the middle ware. It’s essentially the software that sends information from the base trading engine to your front-end terminals. Our job is to ensure that there’s fairness in the market so clearly, this would not create a fair situation so what we have done is basically shut it down. But we have isolated the problem,” Sicat said.
The trading was halted at 10:02 a.m. and resumed only at 2:55 p.m.. Trading was also halted on August 18 and on Monday, August 24.
Sicat apologized for the problem but said the PSE could not extend trading hours to make up for the lost time to minimize further technology risks.
“We halted trading and the first thing to say is we do sincerely apologize to all our stakeholders. These are investors. These are broker dealers. These are issuers as well those who are interested in the Philippine markets. We know it is an inconvenience but we also thought that it’s the right thing to do,” Sicat said.
He said the PSE maintained the regular trading day.
Sicat assured the exchange has resolved the technical problems.
“We hopefully resolved any other issues so we wouldn’t have the same situation moving forward...I agree that this is probably unprecedented. Given that it is technology that we are dealing with now, I think we have the best minds that we have, both our team as well as our technology providers. We hope it won’t happen again. But we have to be mindful,” he said.