Stocks tumble; BDO, Megaworld fall

The stock market sank Monday along with the rest of Asia after a surge in coronavirus infections in several countries, including the US, prompted officials to reimpose containment measures that have fanned worries about the economic recovery.

The Philippine Stock Exchange Index dropped 86.66 points, or 1.4 percent, to 6,105.18 on a value turnover of P5.6 billion. Losers overwhelmed gainers, 142 to 63, withy 44 issues unchanged.

BDO Unibank Inc., the biggest lender in terms of assets, fell 4.6 percent to P94, while conglomerate Ayala Corp. slipped 2.9 percent to P762.

Megaworld Corp., the largest lessor of office spaces, declined 4 percent to P2.89, while parent Alliance Global Group Inc. of tycoon Andrew Tan decreased 3.3 percent to P6.50.

Asian markets tracked steep losses in New York on Friday.

Tokyo lost more than two percent and Seoul was 1.9 percent off, while Sydney, Mumbai, Taipei and Singapore lost more than one percent each.

Hong Kong sank 1.3 percent as investors there keep a nervous eye on this week’s July 1 China handover anniversary, fearful of fresh protests.

Shanghai finished 0.6 percent lower, with little solace in upbeat weekend data showing profits at Chinese industrial firms rose last month for the first time since November.

There were also losses in Jakarta and Bangkok..

After weeks of lockdown easing across the planet, there are signs of a second wave of infections in key cities, jolting the investor confidence that has helped power a surge in equities from their March trough.

Bars in Los Angeles and six other counties in California”•with a joint population of more than 13 million people”•were ordered to close up again, just over a week after reopening, while San Francisco is stalling its easing measures.

There has also been a sharp pick-up in Texas and Florida, two of the most populous American states and home to a combined 50 million people.

Other big states including Arizona and Georgia have also seen large jumps in cases.

“This is a very, very serious situation and the window is closing for us to take action and get this under control,” said Health and Human Services Secretary Alex Azar.

Stephen Innes at AxiCorp warned that increased mobility as parts of the country returned to business had likely led to the recent rise in coronavirus infections.

That had in turn caused “a reversal of mobility trends and a reduction in economic activity, particularly in the hardest-hit states,” he said.  

OANDA’s Jeffrey Halley added that the trajectory of new infections in the US was still a “primary concern” for investors.

“As the consumer of last resort for the rest of the world for so long, an aggressive double-dip in the US economic recovery will surely see the rest of the world catch a cold,” Halley said.

The issue is not confined to the US.

China has imposed a strict lockdown on nearly half a million people in a province surrounding Beijing to contain a fresh cluster, with a city official calling the situation “severe and complicated.”

“Equity market consolidation is broadly in line with our thinking that equities were getting ahead of economic fundamentals,” said Tai Hui, a strategist at JP Morgan Asset Management. With AFP