PSEi tumbles to more than 1-year low

MANILA, Philippines (Updated 4:53 p.m.)— Fresh from a holiday, local financial markets plummeted on Wednesday, following a bearish regional trend as investors remained spooked by the spread of the Coronavirus Disease-19 and how it would affect their business.

The Philippine Stock Exchange (PSEi) index sank 277.6 points or 3.86% to close trading at 6,909.84. This was the local stock barometer’s weakest performance since it ended trading at 6,843.83 on Nov. 13, 2018.

All sub-indices were in the red, with decliners outnumbering advancers, 184 to 27. 

At the foreign exchange market, the peso broke the 51-peso level, to close at 51.035 to a dollar, the weakest since January 3 when the currency reached 51.09 against the greenback.

Dollars traded went up to $1.43 billion from Monday’s level of $1.303 billion. Financial markets were closed on Tuesday in observance of the EDSA People Power anniversary. 

“There was still the fear of the unknown arising from the nCoV (novel coronavirus) global outbreak,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc., in a text message.

Locally, Ravelas said investors are worried over the impact of the virus on tourism and consumption, the latter accounting for more than three-fourths of the economy. 

“Philippine shares tumbled after the holiday after the CDC (Centers for Disease Control and Prevention) warned of more cases and companies indicated earnings will be affected by the virus,” Luis Limlingan, managing director at Regina Capital, said in a market commentary.

Heading south

On Wednesday, the Philippines announced it is banning entry of travelers coming from North Gyeongsang Province in South Korea, the epicenter of the ongoing COVID-19 outbreak in the country where more than 1,100 people were confirmed infected.

The government has also prohibited Filipinos from traveling to South Korea for now, officials said. South Korea is the Philippines’ top source of tourists, accounting for 24% of arrivals in 2019.

PSEi’s lackluster performance generally followed regional trend as investors await cues from health officials that COVID-19 is already under control. In Tokyo, Nikkei 225 index shed 0.8% from the previous day, a drop also recorded in Shanghai’s composite index.

Markets in Sydney, Seoul, Singapore, Wellington and Jakarta were all down 1%. Taipei and Bangkok were also down. 

Among Asian currencies, the yen also lost ground to the greenback.

Going forward, Limlingan said company “earnings” for the last quarter of 2019 being reported this month and “more updates on COVID-19” may provide direction for Philippine shares. Ravelas agreed.

“Fourth-quarter earnings could provide a cushion if full-year 2019 earnings are good. If it does not meet forecast, any rally could be a sell on news,” Ravelas said. – with AFP