Stocks plummet as investors panic

Local shares plunged 8.3 percent yesterday with the key index losing the most in a single day since the Asian financial crisis of 1997, mirroring devastating selloffs in markets across the world as investors remain worried about the risks of a global recession.

 The main composite index plunged 190.64 points to 2,097.80 in its worst single-day drop since losing 263.84 points on Feb. 28, 2007.

The devastation wiped out P888 billion in market value for this week alone on growing fears that the financial crisis will spark a global recession. The drop brought the composite index to its lowest level since it closed at 2,084.62 on June 29, 2006.

The all-share index, which has fallen for six straight sessions, lost 95.21 points or 6.5 percent to 1,371.08 points.

Volume traded was 2.74 billion valued at P2.98 billion.

Losers dominated gainers 135 to 7 while 12 stocks were unchanged.  The property sub-index was the heavily-battered sector, skidding 9.57 percent followed by the industrial sector which fell 8.62 percent. A total of 2,740.65 million shares were traded valued at P3.03 million.

 “This only goes to show that the market is so emotional right now.  There’s a lot of fear.  We don’t when the crisis is going to end, ” said Jun Calaycay of Accord Capital Securities.

 Investors have been scurrying to convert to cash due to lingering concerns on the global economy with the financial problem now spreading to Europe and other emerging countries.

 “The market managed to be in the green in the first hour of trading with bargain hunters pushing the main index up by as much as 7.32 points intraday.  However, warnings about a major slowdown in the economies made the rally short lived.  Asian markets were mostly up but foreigners sold heavily today in the local bourse.  Markets abroad had a modest rally after the concerted rate cuts among major central banks in the world,”  AB Capital Securities said. 

 Telecom giant Philippine Long Distance Telephone Co. was the biggest index mover yesterday, falling 8.6 percent to P2,245 as it was sold down heavily by foreign institutions.  Total net foreign selling amounted to almost a billion pesos today. 

 “Given the high level of volatility, it remains hard to predict how the market will behave in the coming sessions.  The market has to stabilize a bit and the narrower trading range today is a good first step.  If things will quiet down in the global markets, we could see a technical rebound or a dead cat bounce for the local bourse,” AB Capital Securities said.

“The market is already extremely oversold and the PSEi’s stochastic oscillator is about to turn and give a buy signal.  Supporting the view of a technical rebound is the divergence between the main index and its momentum indicators.   Again, everything still depends on how the global market will behave.  Another round of volatility abroad will mean more losses in the local market,” AB Capital Securities added. 

Erwin Balita of SB Equities told said: “What can we do? We’re at the mercy of global developments.”

Dealers put the support level at 2,100 points.

Philippine Long Distance Telephone plunged 8.6 percent to P2,245.

Ayala Corp. dropped 9.2 percent to P226 and unit Bank of the Philippine Islands ended 8.6 percent down to P37.

San Miguel A lost seven percent to P48.50, while its B shares closed 6.9 percent down to P47.