Share prices fell Monday along with the rest of Asia, with sentiment dragged by the Federal Reserve’s plans to taper monetary policy, surging Delta infections and signs of weakness in the global recovery.
The Philippine Stock Exchange Index dropped 54.95 points, or 0.8 percent, to 6,857.90 on a value turnover of P7.2 billion. Losers overwhelmed gainers, 165 to 42, with 36 issues unchanged.
DITO CME Holdings Corp., the third mobile phone company, declined 4.4 percent to P7.81, while Alliance Global Group Inc. of tycoon Andrew Tan sank 5.2 percent to P10.22.
DMCI Holdings Inc. of the Consunji Group decreased 3.2 percent to P6.85, but PLDT Inc., the biggest telecommunications firm, rose 2.6 percent to P1,510.
The rest of Asian markets slumped Monday on fears about contagion from a possible collapse of teetering property giant China Evergrande.
Hong Kong again led the losses with Evergrande due to pay interest on some of its loans and bonds this week, with observers expecting it to default.
Uncertainty about the future of the company, which is drowning in debts of more than $300 billion, has shattered confidence on trading floors, with property companies and banks in Hong Kong taking the brunt of the selling.
Hong Kong shed 3.3 percent, with Evergrande down almost 19 percent briefly before ending 10 percent off. New World Development dived 12.3 percent and Henderson Land tanked 13.2 percent. The Hang Seng Property Index dropped more than six percent, its worst performance since May 2020.
Analyst Philip Tse, of BOCOM International Holdings, warned “there will be further downside” unless leaders give a clear signal on Evergrande or ease up on their clampdown on the real estate sector.
Despite the growing crisis, the government has yet to step in to prevent Evergrande from going under.
Analysts say that while leaders are looking to curb excessive risk-taking, they will probably work to prevent the issue from becoming unmanageable.
“The central government’s priority of social stability makes restructuring likely with haircuts for debt holders, but spillovers to other listed property developers means there will likely be a real economy impact on the real estate sector,” said National Australia Bank’s Tapas Strickland.
“To what extent Evergrande slows the growth momentum remains unclear.”
The selling was mirrored elsewhere in Asia.
Sydney was down more than two percent, with miners also being hammered by a plunge in iron ore prices, while Singapore, Wellington, Mumbai, Bangkok and Jakarta were also well down. Tokyo, Shanghai, Seoul and Taipei were closed for holidays.
The selling followed another loss on Wall Street, where investors are tracking the progress of Joe Biden’s multi-trillion-dollar spending bills, while there is unease that lawmakers have yet to raise the US debt ceiling, risking the country defaulting on its own obligations.
The Fed’s policy meeting this week is being closely followed, with some experts predicting it could set a timetable for winding in its vast bond-buying program put in place last year to support the economy and equity markets. With AFP