The stock market plunged Monday days after US President Donald Trump’s vow to impose fresh tariffs on goods from China sent trade war fears soaring.
The Philippine Stock Exchange Index sank 239.91 points, or 3 percent, to 7,890.02 on a value turnover of P6.4 billion. Losers overwhelmed gainers, 149 to 55, with 47 issues unchanged.
Jollibee Foods Corp., the biggest fast-food chain, fell 4.3 percent to P247, while SM Prime Holdings Inc. of the Sy Group, the largest integrated property developer, also lost 4.3 percent to P36.
Globe Telecom Inc., the second-biggest telecommunications firm, dropped 5.5 percent to P1,984, while Universal Robina Corp., the largest snack food maker, fell 4.5 percent to P161.90.
The rest of Asian markets plummeted Monday as the Chinese yuan fell sharply.
Trump’s announcement, which came on Thursday, means virtually all of the $660 billion in annual merchandise trade between the world’s two biggest economies will be subject to punitive tariffs, with the latest duties due to take effect September 1.
The news saw all three major Wall Street indices slump to their lowest levels since June, with the S&P 500 and Nasdaq recording their worst weekly losses of 2019 on Friday.
In China, the yuan dropped to its lowest level to the dollar since August 2010, fueling speculation that Beijing was devaluing its currency to support exporters and offset Trump’s latest threat to hit $300 billion in Chinese goods with 10 percent tariffs.
The yuan’s depreciation spurred a sell-off across Asian markets.
Hong Kong lost more than three percent before staging a modest recovery as pro-democracy protesters targeted the financial hub’s transport network in a citywide strike aimed at forcing concessions from its embattled pro-Beijing government.
Tokyo shed 1.7 percent while Shanghai fell 1.6 percent. Singapore dropped 1.8 percent while Taipei and Seoul were also down.
The US leader regularly accuses the Chinese central bank of artificially weakening the yuan—charges long denied by Beijing.
The onshore yuan tumbled to 7.0307 against the dollar—its lowest level since 2008–while the more freely traded offshore yuan tumbled to 7.1085, breaching the 7.0 level which investors see as a key threshold in the currency’s value.
Multiple rounds of tit-for-tat tariffs between the world’s top two economies have already battered trade, with China’s American imports shrinking 30 percent in the first half of the year.
Beijing has vowed to hit back if Washington goes ahead with its latest threat, while news that demand for US exports had weakened underscored concern that trade was becoming a trouble spot for economies worldwide.
“China is likely to drag out their response and retaliate in many ways against the US trade measures,” warned Edward Moya, senior market analyst at OANDA.
Negotiators from both nations are expected to reconvene in Washington in early September for another round of talks after last week’s discussions in Shanghai, but investors remain nervous, Moya said.
“Financial markets are still working on pricing in a complete collapse of trade talks amongst the Chinese and Americans,” he said. With AFP