Panic selling plagues stocks

Wipes out nearly P1 T from market

MANILA, Philippines — Panic selling as a result of widespread fears over COVID-19 knocked out the local stock market yesterday, tripping the bourse-imposed circuit breaker in a crash not seen since October 2008 after global investment giant Lehman Brothers collapsed.

The benchmark Philippine Stock Exchange index (PSEi) wiped out P998 billion or nearly P1 trillion in market capitalization yesterday after closing 616.99 points or 9.71 percent lower to 5,736.27, breaking past the 6,000 threshold.

This marks the PSEi’s second biggest one-day percentage decline after the 12.27 percent drop on Oct. 27, 2008 and the biggest one-day point decline since the 487.97-point drop logged on Aug. 24, 2015.

The broader All Shares index was also down 8.29 percent to 3,492.77.

Trading was halted in the afternoon after the PSEi hit an intraday decline of 10.03 percent, tripping the circuit breaker. When this happens, the PSE imposes a trading halt for fifteen minutes.

Turnover value for the day came in at P7.96 billion, excluding block sales.

Market breadth was widely negative, 226 to 7, while 25 issues were left unchanged.

Foreign investors were quick to sell Philippine shares, translating to a net foreign selling of P773.9 million yesterday.

Piper Chaucer Tan of Philstocks Financials said the market took its bloodiest hit in  recent years as a result of the COVID-19 scare.

“This is because of the scare of COVID-19. The first circuit breaker was activated on Oct. 27, 2008. This is the second time that the circuit breaker was activated,” Tan said.

He said the possibility of a lockdown in Metro Manila and its economic fallout is what lingers in the market right now.

Adding to the hysteria  is the oil price war among oil producing countries.

“Economic policies in times like this can be limited. What is crucial is whether the country’s health care system would be able to contain the virus,” Tan said.

Chris Mangun of AAA Securities shared the same view.

“Investors reacted to the possibility of a lockdown in Metro Manila to contain the covid-19 disease before we have a massive outbreak,” he said.

Mangun said the sudden selling coupled with a lack of buying, sent prices into a free fall, something the market has not seen since the last financial crisis,

Unfortunately, the hysteria may continue in the coming days until there is more evidence that the virus can be contained.