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Friday, March 29, 2024

Stocks slump; Ayala, SM Prime fall

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The stock market plunged Monday, joining the rest of Asia on fears the economic crisis gripping Turkey could spill over into the global economy.

The Philippine Stock Exchange Index plummeted 169.71 points, or 2.2 percent, to 7,635.27 on a value turnover of P5.2 billion. Losers overwhelmed gainers, 140 to 58, with 39 issues unchanged.

Manila Electric Co., the biggest retailer of electricity, slumped 3.5 percent to P355.40, while SM Prime Holdings Inc. of retail tycoon Henry Sy. Sr. tumbled 3.4 percent to P37.20. 

Conglomerate Ayala Corp. lost 3.2 percent to P953.50, while unit and major property developer Ayala Land Inc. also declined 3.2 percent to P41.25.

The rest of Asian markets tumbled and the Turkish lira dived almost eight percent Monday.

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With investors already on edge over the China-US trade war, the lira’s collapse sparked a sell-off in Europe and New York at the end of last week, with safe-haven assets including the Japanese yen and Swiss franc rallying.

“The dominating theme of this week is likely to be the Turkish situation,” Okasan Online Securities said in a note to clients.

“The ‘Turkey shock’ from last weekend, triggered by sharp plunges of the lira, has fueled fears that it may impact financial institutions in Europe,” it said.

On equity markets Hong Kong shed 1.4 percent in late trade and Shanghai finished 0.3 percent lower, while Tokyo dropped two percent with exporters hurt by the stronger yen.

Sydney fell 0.4 percent, Singapore was 0.8 percent lower and Seoul shed 1.5 percent. There were also sharp losses in Taipei, Manila and Jakarta, which dived 3.3 percent after Indonesia reported Friday its biggest current account deficit in about four years.

The lira dived to a record low of 7.2362 to the dollar at one point overnight before recovering slightly after the country’s finance minister said Ankara was planning to roll out an “action plan” on Monday in response to the crisis.

That was followed by the central bank saying it was ready to take “all necessary measures” to ensure financial stability, easing reserve requirements for lenders and promising to provide them with liquidity.

“Our institutions will take necessary action from Monday in order to relieve the markets,” Berat Albayrak said, adding that the plan would center on “the state of our banks and the small and medium size enterprises” most affected by the lira’s plunge.

The lira has been hammered this year, having started January at around 3.70 to the dollar according to Bloomberg data, while it is also sharply down against the euro.

However, the European unit was taking a hit against the greenback on worries about the possible impact on some European banks, including Spain’s BBVA, Italy’s UniCredit and France’s BNP Paribas.

Despite the tumult, President Tayyip Erdogan remains in combative mood, calling the rout a “political, underhand plot” against Turkey.

The crisis has been sparked by a series of issues including a faltering economy—the central bank has defied market calls for rate hikes—and tensions with the United States, which has hit Turkey with sanctions over its detention of an American pastor. With AFP

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