The stock market extended its slump Tuesday joining a sell-off across Asian and European markets on rising trade war fears after Donald Trump threatened fresh tariffs on Chinese imports and Beijing warned of countermeasures.
The Philippine Stock Exchange Index sank 101.50 points, or 1.4 percent, to a new 15-month low of 7,312.6 on a value turnover of P6.9 billion. Losers overwhelmed gainers, 125 to 70, with 47 issues unchanged.
The index’s close was its lowest since 7,312.61 on March 31, 2017. The PSEi moved closer to the bear market after hitting an intra-day low of 7,253.12. A bear market occurs when the index declines 20 percent from its peak of 9,058.62 on January 29, 2018 to 7,246.90.
Metro Pacific Investments Corp., which is into toll roads, water and electricity distribution, power generation and hospitals, fell 3.5 percent to P4.65, while PLDT Inc., the biggest telecommunications company, lost 3.3 percent to P1,210.
LT Group Inc. of tycoon Lucio Tan, slumped 4.4 percent to P19.02, while BDO Unibank Inc., the largest lender in terms of assets, declined 2.6 percent to P130.50.
Hong Kong and Shanghai stocks, meanwhile, led a sell-off across Asian and European markets. Tokyo was 1.8 percent lower while Seoul sank 1.5 percent, Singapore slipped 0.1 percent and Taipei fell 1.7 percent. Bangkok and Wellington were also sharply lower. Sydney was marginally down.
Trading floors were a sea of red as Hong Kong dived 3.1 percent and Shanghai plunged 3.8 percent”•ending around its lowest since mid-2016″•as traders on both markets returned from a long weekend.
Trump said he had asked the US Trade Representative to identify $200 billion worth of imports to be targeted, adding he would hit a further $200 billion if Beijing retaliates.
Investors were already on edge after the world’s top two economies on Friday announced tit-for-tat measures on goods valued at about $50 billion as the US president pushes ahead with his protectionist America First agenda.
“The trade relationship between the United States and China must be much more equitable,” he said in explaining his decision.
China slammed the threats as “blackmail” and warned that if the US followed through with the tariffs it would “have no choice but to take comprehensive measures of a corresponding number and quality and take strong, powerful countermeasures.”
The development took some by surprise and stoked fears of a potentially damaging trade war between the world’s top two economies.
“That was quick and sudden, reminding us just how quickly things can get right out of hand,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“Indeed, this is moving beyond ‘tit-for-tat’ levels and, predictably, investors are running for cover under the haven umbrellas as global equity indices are crumbling under the weight of an escalating trade war.
“Buckle up as this could get messy.”
Hong Kong-listed shares in Chinese telecoms equipment maker ZTE dived 24 percent after US senators voted to reimpose a seven-year ban on high-tech chip sales to the company.
The move defied the White House’s decision this month to replace the ban with a $1.4-billion fine, providing a lifeline to the firm, which was threatened with collapse as it relies on the crucial US hardware.
ZTE has now lost around 60 percent since trading in it resumed last week after a two-month suspension that came in following the initial ban. With AFP