Market sinks on new lockdown rules

The stock market plummeted Friday after President Duterte approved a recommendation to place Metro Manila under enhanced community quarantine, the strictest lockdown level, to curb the spread of the virulent COVID-19 Delta variant from Aug. 6 to 20.

The Philippine Stock Exchange Inc. slumped 226.30 points, or 3.5 percent, to 6,270.23 on a value turnover of P6.3 billion. Losers overwhelmed gainers, 159 to 47, with 42 issues unchanged.

Major property developer and retail mall operator Ayala Land Inc. of the Ayala Group sank 7 percent to P32.70, while Universal Robina Corp., the biggest snack food maker, declined 4.4 percent to P126.70.

SM Prime Holdings Inc. of the Sy Group, the largest shopping mall owner, dropped 4.1 percent to P31.45, while parent SM Investments Corp. fell 4.8 percent to P910.50.

The rest of equities fell in Asia on Friday, setting them up to end a volatile week on a negative note as China’s regulatory crackdown continued to spook investors.

Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Wellington, Taipei and Jakarta were all in negative territory, though Singapore and Mumbai rose.

“It’s the fear of the unknown,” Justin Tang, at United First Partners, said. “Market sentiment is on thin ice. Investors probably expected more meat, however they only got bones in respect to details of the Chinese government’s exhortation to calm down.”

The losses came despite a positive lead from Wall Street, where traders were cheered by data showing the US economy returned to its pre-pandemic size in the second quarter but fell short of forecasts, which eased pressure on the Federal Reserve to begin tapering its ultra-loose monetary policies.

While the corporate earnings season has beaten expectations and economic data suggests the global recovery is still on track—despite spiking Delta COVID variant cases—Asian markets have been clobbered this week by China’s sweeping moves against the private tuition, tech and property sectors.

The measures, which include banning education firms from making a profit and forcing Tencent to give up its exclusive music rights, have fueled concerns that others might be in Beijing’s crosshairs.

Hong Kong lost more than nine percent in three days in reaction to the announcements, while Shanghai took a hit and other markets globally were also rattled.

Chinese state media and regulators looked to soothe investor fears by saying officials were not preparing a wide-ranging crackdown on a range of industries and that economic fundamentals were healthy, which provided a springboard for Asia on Thursday.

But trading floors remained nervous, and analysts warned Beijing might not be finished just yet. Tencent, ecommerce giant Alibaba and food delivery firm Meituan—which had also faced Beijing’s ire—and tutorial firms were all solidly lower again in Hong Kong. With AFP

“When it comes to China, if you can align your investment strategy with what the government wants, I think generally you are going to do pretty well in that situation,” Chris Weston, of Pepperstone Financial Pty, told Bloomberg Television.