SHARE prices plunged for the second straight trading session on Tuesday, with the Philippine markets not spared from a contagion-like fall of other markets across the region.
The benchmark Philippine Stock Exchange index fell 65.58 points to close at 8,550.42 points, mainly on foreign selling that reached a net sell of P1.44 billion.
“Philippine markets could do little to withstand another round of sell-off regionally, with the US recording its worst one-day point drop in history and it was down more than 1,500 points intraday before settling to 24,345.75,” Regina Capital and Development Corp. said in a research note.
The market already opened weak at 8,475.08 and even sunk as low as 8,379.83, recovering only before the close of trade. All other subindices were down, led by the Mining and Oil index that sunk 256.71 points, or 2.2 percent, to 11,509.38 points.
The broader All Shares index was down 42.51 points to 5,027.91; the Financials index fell 24.16 to 2,179.92; and the Holding Firms index shed 97.66 to 8,689.61.
Value of trade reached P10.42 billion, while losers edged gainers 159 to 52, and 44 shares were unchanged. Ayala Land Inc. was the day’s most actively traded and it lost P0.80 to P44 per share; SM Investments Corp. was down P5 to P1,000; lender BDO Unibank Inc. shed P0.50 to P150; property developer SM Prime Holdings Inc. rose P0.55 to P35.80; Ayala Corp. declined P25 to P1,005; and PLDT Inc. shed P15 to P1,530.
Tuesday’s trade was worse than Monday’s when the PSEi closed at 8,616, as Wall Street signaled the end of a bull run.
“Markets in Asia also opened lower in response to the weak overnight markets,” RCDC’s research note on February 5 read. “The trading saw renewed selling pressure on high-momentum sectors, such as holding firms and properties.”
Not alone
THE Philippines, however, was not alone in the field as Asian markets were also rattled on Tuesday by the miseries on Wall Street: Japan’s Nikkei 225 index briefly dipped more than 7 percent.
The Tokyo benchmark bounced throughout the day, ending 4.7 percent lower at 21,610.24.
All regional bourses were battered a day after the Dow Jones industrial average suffered its worst percentage decline since August 2011 and its biggest point drop ever. The Shanghai Composite index fell 3.4 percent to 3,370.65 and Hong Kong’s Hang Seng skidded 5.1 percent to 30,595.42.
Australia’s benchmark S&P ASX 200 slid 3.2 percent to 5,833.30 and South Korea’s Kospi declined 1.5 percent to 2,453.31.
Gains erased
Two days of steep losses erased the US market’s gains from the start of this year, ending a spate of record-setting calm for stocks in a pullback that market pros have been predicting for some time.
Declines of 10 percent or more are common during bull markets. There hasn’t been one in two years, and by many measures stocks have been looking expensive.
The same is true of many global markets, where investors have been bracing for a correction while hoping not to see one.
“There would be few places to hide from the risk-off atmosphere that is expected to extend its stay in Asian markets today in a significant manner,” Jingyi Pan of IG said in a commentary. “This is fear rolling over itself.”
Panic in other markets can send investors racing for the “safe haven” of Japanese yen holdings, she noted. That is painful for Japanese and other regional export manufacturers, whose competitiveness is hurt by stronger currencies that push their prices relatively higher.
Losses downplayed
JAPANESE officials sought to downplay the losses.
“The economy has had record-high corporate earnings and improving wages and labor conditions. Consumer spending is also recovering and so the Japanese economy is stable,” said Toshimitsu Motegi, the economy minister. “As for market movements, I will watch closely for any impact on the economy.”
The US dollar ticked up to ¥109.14 from ¥109.12 late Monday. The euro rose to $1.2390 from $1.2369.
At its lowest ebb during Monday’s roller-coaster trading on Wall Street, the Dow had lost 1,597 points. That came during a 15-minute stretch, where the 30-stock index lost 700 points and then gained them back.
The Dow finished down 4.6 percent at 24,345.75. The Standard & Poor’s 500 index, the benchmark most professional investors and which many index funds use, sank 4.1 percent, to 2,648.94. That was its biggest loss since August 2011, when stocks were reeling as investors fretted over European government debt and the US credit rating was downgraded after the debt-ceiling impasse.
The Nasdaq composite fell 3.8 percent to 6,967.53, while the Russell 2000 index of smaller-company stocks sank 3.6 percent to 1,491.09.
Bad drop
INVESTORS have sold shares out of concern that with inflation creeping higher, the Federal Reserve might raise interest rates more quickly, making it more expensive for people and businesses to borrow money and derailing the economic expansion and the prolonged share price rally.
The S&P 500 has fallen 7.8 percent since it set its latest record high on January 26.
Monday’s drop was bad, but there were worse days during the financial crisis, including a 777-point plunge in the Dow in September 2008 that was equivalent to 7 percent, far bigger than Monday’s decline.
A 10-percent drop from a peak is referred to on Wall Street as a “correction.”
With AP
Image credits: Alysa Salen