Local shares retreat as response to COVID-19 emergency leaves investors unimpressed
MANILA, Philippines — Philippine shares on Monday ended a shortened trading session bleeding, opening the week in a sour note as investors count the potential economic fallout from desperate measures imposed by authorities around the world to fight the coronavirus pandemic.
Local equities continue to be whipsawed by the disease, sending the bellwether Philippine Stock Exchange index down 7.92% or 458.57 points to close at 5,335.37 at the end of shortened trading hours as the government put Metro Manila in a lockdown. Meanwhile, the broader all-shares index fell 6.35% or 221.85 points to finish at 3,271.79.
“Local shares plunged considerably as investors assess the spread of the virus locally and globally,” Luis Limlingan, head of sales at Manila-based brokerage firm Regina Capital, wrote in a market commentary.
In a bid to contain the spread of the virus, which has infected 140 people and killed 12 in the Philippines as of reporting, President Rodrigo Duterte placed Metro Manila under a month-long community quarantine.
But with the capital sealed off with its more than 12 million people, businesses are expected to take a beating from falling demand and disruptions on their operations, and all eyes are now on the Bangko Sentral ng Pilipinas which is expected to slash its key rate and further reduce bank reserves to help cushion the economy from headwinds.
Meanwhile, the US Federal Reserve’s decision to cut its benchmark rate to virtually zero during an emergency meeting Sunday (Washington time) fanned fears that the US central bank may have reached the limits of its power to fend off recession as the coronavirus spreads.
“With the number of cases rising, the country has added measures for more social distancing. This however would imply that growth would be cut as establishments would realize less business as a result,” Limlingan explained.
“Furthermore, stock futures plunged Sunday night even after the Federal Reserve embarked on a massive monetary stimulus campaign to curb slower economic growth amid the coronavirus outbreak,” he added.
All subindices were engulfed in a sea of red, led by holding firms which lost 10.02% followed by financials (-8.93%), property (-7.78%), mining and oil (-4.32%), industrial (-2.49%) and services (-2.20%).
Decliners trumped advancers, 145 to 46, while 40 names were unchanged.
Asian markets fall
The PSEi tracked a regional downtrend. Hong Kong fell 2.5% and Singapore a similar amount, with Seoul and Taipei around one percent down.
Shanghai dropped 0.8% after the release of the industrial production data, which came a week after news that Chinese exports had collapsed.
Tokyo ended the morning slightly higher, supported by expectations the Bank of Japan will announce its own policy support measures.
The broad retreat follows a tumultuous week that saw some stock markets suffer their worst days in decades and in some cases their worst ever.
And experts said there was a concern that the Fed might be running on empty with regards to further action.
Sunday's move "raises the question of whether the Fed has anything left in the tank should the spread of the virus not be contained", said Kerry Craig at JP Morgan Asset Management.
"With little economic data to go on it's not clear just how deep the economic impact will be. Our view is that the drag on the services sector from social distancing policies and shock from the fall of the oil price on the energy sector will be enough to tip the US into recession, but not necessarily a long one." — with AFP
- Latest
- Trending
