Stocks slumped Tuesday along with the rest of Asian markets on concerns over the impact of China’s COVID-19 restrictions on the world’s second-largest economy as investment banks slashed their forecasts.
The Philippine Stock Exchange Index sank 110.4 points, or 1.6 percent, to 6,577.45 on a value turnover of P20.2 billion. Losers overwhelmed gainers, 120 to 63, with 54 issues unchanged.
Conglomerate Ayala Corp. of the Ayala Group dropped 2.9 percent to P660, while unit and major property developer Ayala Land Inc. declined 2.8 percent to P27.70.
BDO Unibank Inc. of the Sy Group, the biggest lender in terms of assets, fell 2.6 percent to P123.50, while PLDT Inc. of Indonesia’s Salim Group, the largest telecommunications firm, decreased 2.2 percent to P1,916.
A strong rally on Wall Street, where the Dow closed 2.0 percent higher, did not carry over to Asia, and Beijing’s announcement of a fresh raft of measures to stimulate the economy did little to calm nerves.
The package announced on Monday includes more than 140 billion yuan ($21 billion) in additional tax rebates, bringing the total amount of tax relief this year to 2.64 trillion yuan, Xinhua news agency reported following a meeting of the State Council chaired by Premier Li Keqiang.
China’s economy has taken a hit from Beijing’s zero-COVID approach to the pandemic, which has resulted in lengthy lockdowns of major cities and mass testing of millions of people.
Prolonged virus lockdowns have constricted supply chains, dampened demand and stalled manufacturing.
Concerns over the economic fallout from China’s dogged pursuit of a zero-COVID approach and its knock-on impact on supply chains and the wider global economy spooked investors, with Asian markets well into the red on Tuesday.
Tokyo lost 0.9 percent and Shanghai closed 2.4 percent lower while Hong Kong slipped 1.8 percent.
Seoul dropped 1.6 percent, while Taipei, Sydney, Singapore, Bangkok and Kuala Lumpur were all lower. Jakarta was the sole Asian market in the green.
Investment banks UBS Group and JPMorgan Chase cut their China economic growth forecasts due to the impact of the coronavirus strategy.
UBS on Tuesday cut its 2022 GDP growth forecast to 3.0 percent from 4.2 percent while JPMorgan on Monday trimmed its forecast to 3.7 percent from 4.3 percent, Bloomberg News reported.
“The lingering restrictions and lack of clarity on an exit strategy from the current COVID policy will likely dampen corporate and consumer confidence and hinder the release of pent-up demand,” UBS economists including Tao Wang wrote in a research note, according to Bloomberg.
China has targeted full-year growth of around 5.5 percent, but data published in April showed that first-quarter growth slowed to 4.8 percent after its economy lost steam in the latter half of last year. With AFP
Later in the week, investors will be eyeing the minutes from the latest Federal Reserve rate-setting meeting for clues about further hikes aimed at reining in inflation. A raft of economic figures will also provide insights into the state of the US economy. With AFP
