The peso and the stock market plunged Monday, weighed down by a flare-up in tensions between Iran and Saudi Arabia and fears about a slowdown in China.
The peso dropped to 47.12 against the US dollar in the first trading day of 2016 from 47.06 last week, while the Philippine Stock Exchange Index plummeted 118.66 points, or 1.7 percent, to 6,833.42 on a value turnover of nearly P3 billion.
Losers overwhelmed gainers, 120 to 42, with 36 issues unchanged.
Chinese stocks also plunged, leading an Asian meltdown as more weak factory data fanned fears about a slowdown in the world’s number two economy.
JG Summit Holdings Inc. of retail tycoon and industrialist John Gokongwei tumbled 4.1 percent to P70.30, while Philippine Long Distance Telephone Co., the biggest telecommunications firm, fell 2.9 percent to P2,000.
SM Investments Corp. of retail tycoon Henry Sy dropped 2.6 percent to P841.50, while unit SM Prime Holdings Inc. lost 1.6 percent to P21.35.
Ayala Land Inc., the second-largest property developer, decreased 1 percent to P34.10, while Megaworld Inc., the biggest lessor of office spaces, retreated 2.8 percent to P4.13.
Authorities in China, meanwhile, suspended trading on its stock markets in the early afternoon after shares sank seven percent.
The sharp losses revived memories of the summer rout that saw Shanghai crash about 40 percent and trillions of dollars wiped off valuations.
The Shanghai market ended 6.9 percent lower while Shenzhen shed 8.2 percent.
Markets across Asia were stung by the losses, as well as news that Saudi Arabia had severed diplomatic ties with its old foe Iran Sunday after protesters ransacked its embassy in Tehran following the execution of a Shiite cleric.
Riyadh gave Iranian diplomats two days to leave the kingdom, while the supreme leader in Tehran said Saudi Arabia would face “quick consequences” for the execution.
The developments are the latest to inflame the region and join a list of negative news that hurt world markets over the past year, including China’s economic malaise, plunging oil prices and anaemic global growth.
“It’s going to be a testy start to the week,” said Angus Nicholson, a Melbourne-based market strategist at IG Ltd.
“The execution raises uncertainty about the oil price, with concerns and tensions in the Middle East, and that will be a real driving force.”
Investors fled to safe investments such as the US dollar and yen, sending stocks and emerging-market currencies falling. With AFP