The stock market suffered its second biggest single-day loss since the global financial crisis in 2008, pulling down the benchmark index to a seven-year low after the World Health Organization declared the coronavirus disease 2019 as a pandemic.
The 30-company Philippine Stock Exchange index sank 616 points, or 9.7 percent, to close at 5,736.27 Thursday. It was the second worst one-day drop since Oct. 27, 2008 at the height of the global financial crisis.
It plunged deeper by 10.33 percent at 2:53 p.m., triggering the circuit breaker which allowed the bourse to implement a 15-minute trading halt. The break aimed to give investors time to digest the impact of an unusual market drop and help restore normalcy to the stock market.
“It was another day of harsh selloffs for local equities as the WHO declared COVID-19 a global pandemic and urged countries to tackle the growing surge in new cases globally,” said Luis Limlingan, managing director at Regina Capital Development Corp.
BDO Capital and Investments Corp. president Eduardo Francisco said the investors’ behavior turned irrational, causing the market to continue with its steep decline.
The index was down more than 2,000 points, or 26.6 percent since the start of the year which pointed to a bear market.
Anxiety over the virus heightened after the government reported new COVID-19 cases in the country.
President Rodrigo Duterte would undergo a precautionary test for the virus, while Finance Secretary Carlos Dominguez and Bangko Sentral ng Pilipinas Governor Benjamin Diokno said they would go on self-quarantine after learning that they were exposed to a person who tested positive for COVID-19.
Analysts are now expecting the market to test the 5,500 level.
Meanwhile, equities and oil prices across the world fell through the floor again on Thursday after Donald Trump banned all travel from Europe to the US for a month to fight the coronavirus, ramping up fears the global economy will careen into recession.
Asian equity markets, already deep in the red in reaction to the WHO announcement, cratered after Trump’s address.
Tokyo ended down 4.4 percent, while Sydney lost 7.4 percent in the ASX 200’s worst day since the 2008 financial crisis. Hong Kong fell 3.5 percent in the afternoon while Shanghai was off 1.5 percent.
Seoul, Singapore and Jakarta each lost more than three percent, while Mumbai tanked more than six percent and Bangkok more than eight percent.
Wellington lost five percent and Taipei retreated 4.3 percent.
The Japanese yen, a key haven in times of crisis, jumped more than one percent against the dollar.
“Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell… after a massively negative signal from trading in US markets it just fell in your lap,” said AxiCorp’s Stephen Innes.
The losses followed another brutal session on Wall Street, with wave after wave of bad news, including Hilton withdrawing its earnings forecast and Boeing saying it would suspend most hiring and overtime pay.
The Dow fell into a bear market having lost more than 20 percent since its recent high, and futures pointed Thursday to another rout in New York and Europe.
The coronavirus outbreak has left virtually no sector untouched, though travel and tourism have been particularly hard-hit as countries institute travel bans and quarantine requirements, with Italy in a country-wide lockdown.
The number of cases across the globe has risen to more than 124,000 with 4,500 deaths, according to an AFP tally. With AFP
