Peso, global markets tumble after ‘Brexit’
The Philippine peso and stocks tumbled Friday after Britain voted to leave the European Union, joining the rest of the global market in a tailspin.
The pound collapsed and world stock markets descended into pandemonium, fueling a wave of global uncertainty.
Sterling hit a 31-year low, crashing 10 percent to $1.3229 at one point, and the euro also plummeted against the US currency as the Brexit result caught markets by surprise.
The Philippine Stock Exchange Index slumped 100.06 points, or 1.3 percent, to 7,629.72 on a value turnover of P9.6 billion. Losers routed gainers, 158 to 37, with 41 issues unchanged.
The peso, meanwhile, lost P0.41 to a US dollar on Friday as investors searched for safe-haven currencies, especially the greenback and yen.
The peso closed at 46.95, weaker than 46.535 on Thursday. It was the local currency’s weakest level in almost two months since closing at 47.09 on May 6, 2016, three days before the national elections.
“As expected, the US dollar and yen benefitted as safe-haven currencies. While regional currencies are down, the peso remained in the middle of the pack,” Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said in a statement.
Tetangco said more volatility in the domestic markets might be seen in the near term. He said monetary authorities would be watching closely the impact to the Philippines “via contagion from moves in the US dollar.”
Megaworld Corp., the biggest lessor of office spaces, dropped 3.6 percent to P4.50, while BDO Unibank Inc., the largest lender, lost 2.3 percent to P107.
Ayala Land Inc., the second-biggest property developer, declined 1.9 percent to P38.20, while Metro Pacific Investments Corp., which is into electricity and water distribution, toll roads, hospitals and mining, fell 2.9 percent to P6.60.
European stock markets went into free fall at the opening, mirroring a rout in Asian markets, which were still open as the referendum results trickled in.
The London FTSE-100 index was down by around 5 percent in morning deals, having come off early lows after British Prime Minister David Cameron announced his resignation.
Banking stocks led the way down, with Royal Bank of Scotland, Barclays and Lloyds all losing close to a quarter of their market value at the opening.
“The British people have voted against the economic warnings of the overwhelming majority of expert economic opinion. Not surprisingly, this morning the referendum result has sent shock waves through global financial markets,” said Daniel Vernazza, economist at UniCredit Research.
The eurozone’s main markets, Frankfurt and Paris, both fell more than 10 percent at one point, as financial stocks took the biggest hit.
In the weeks leading up to Thursday’s historic vote, there had been widespread warnings that a “Brexit” would cause a rout across global markets that would wipe trillions off valuations.
But investors were still clearly wrong-footed by the vote outcome. European stock markets and the pound had gained steadily in the run-up to the referendum on the basis of polls and bookmakers’ predictions. With Julito G. Rada, AFP