Stocks sink to 17-month low, enter ‘bear’ market

Stocks sank to a 17-month low Thursday and officially entered the ‘bear’ market with a 22-percent drop from its peak in January amid foreign funds outflow on concerns a trade war will erupt between the US and China.

The Philippine Stock Exchange index, the 30-company benchmark, fell 163 points, or 2.3 percent, to close at 7,098.15, the lowest since Jan. 4, 2017 when it settled at 7,030.95.

The heavier index, representing all shares, also tumbled 91 points, or 2 percent, to finish at 4,369.21, on a value turnover of P7.9 billion.   Losers outnumbered gainers, 166 to 36, while 41 issues were unchanged.

Only one of the 20 most active stocks ended in the green. JG Summit Holdings Inc., the investment company of the Gokongwei family, rose 1.6 percent to P50.50.  

Analysts said local equities entered the ‘bear’ market after the bellwether fell 22 percent from its peak of 9,058.62 registered on Jan. 29 this year. A bear market is a period when share prices dropped at least 20 percent from a six-month peak.

Data showed that since the start of the year, the index was also down 17 percent, making the Philippines the world’s worst performer this year after Turkey. 

“The reaction to the needed BSP [Bangko Sentral ng Pilipinas] rate hike was still not taken positively as the decision came behind the curve as indicated by the conned meltdown of the PSEi well within the bear market territory,” Luis Limlingan, Regina Capital Development Corp. managing director, said.

The Bangko Sentral earlier raised the benchmark interest rate by 25 basis points to 3.5 percent.

Limlingan said the bearish sentiment was not isolated to the Philippines.

Asian markets mostly fell Thursday, with an early rally overcome by simmering concerns about the China-US trade war.

Worry over the world economy also sent the dollar up against high-yielding currencies as traders sought out safer bets.  The peso closed 53.46 against the dollar Thursday, nearly unchanged from 53.48 a day earlier.

Bargain buyers took advantage of the cheap valuations in the morning after Tuesday’s blow-out that came in response to the world’s top two economies threatening each other with tariffs on a mind-boggling amount of imports.

However, nervous traders turned sellers again as the day wore on, with analysts warning the next plunge could come at any moment, while central bankers voiced concerns about the impact a trade war could have on the global economy.

US traders gave their Asian counterparts a mixed lead, with the Nasdaq hitting a new record close thanks to a surge in tech giants, while the Dow and S&P 500 finished in the red.

Hong Kong sank 1.4 percent and Shanghai finished 1.4 percent lower. Singapore shed 0.3 percent and Seoul lost 1.1 percent, with Bangkok also more than one percent lower.

Analysts said with foreign fund outflows expected to continue, the market was expected to test the 7,000-point level.

Foreign investors continued to sell their Philippine shares, with net foreign outflow reaching P2.65 billion, the biggest in two months. It also marked the 25th consecutive day of foreign selling. With AFP

Topics: Philippine Stock Exchange index , JG Summit Holdings Inc. , Bangko Sentral ng Pilipinas
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