Stocks hit 3-year low

The stock market plunged yesterday, hitting a three-year low amid fears of a global recession.

The Philippine Stock Exchange 30-company composite index lost 97.09 points to 1,995.92 — the first time the main barometer has fallen below 2,000 points since Oct. 28, 2005, when the index finished at 1,960.22.

The all shares index dropped 4.2 percent to 1,284.16 points with decliners swamping advancers 117 to three. Thirteen issues were unchanged from the day-earlier levels.

Turnover reached 1.85 billion shares worth P3.20 billion.

At the foreign exchange market, the peso retreated to its lowest level against the dollar since January 2007 as investors dumped local stocks amid growing fears of a severe global economic down turn.

The peso opened the day’s trade at 48.80 to the dollar but pressure brought it down to as low as 49 during intraday trading, the lowest in 21 months.

By the end of the session, dollar-selling by the Bangko Sentral ng Pilipinas (BSP) brought the exchange rate back up to 48.790 but this level is not expected to hold as the dollar continued to rise and local stock prices plunged.

The recent    selloff at the stock market took even more foreign portfolio investments out of the market.

This steady outflow showed up in the weekly monitor of the BSP where net outflow of foreign portfolio investments was recorded at $25.24 million last week alone.

BSP Deputy Governor Diwa Guinigundo said, however, that it is only a matter of time before the peso would ultimately stabilize.

Guinigundo said remittances are growing by 18 percent against the assumed growth rate of 10 percent so this should provide some cushion especially during the last months of the year.

“Remittances are seasonally high in the last quarter of the year,” he said. “We hope that the peso will receive support from the stronger inflows from remittances. It’s something that is seasonally expected.“

Recession jitters

News that major economies are slipping into recession and major stock markets plunging are weighing on investors, analysts said.

“This is a herd moving out, we don’t have any control over it,” James Lago of PCCI Securities Brokers said.

“Valuation-wise, we haven’t seen these levels since 1998,” Lago added.

“The market is very emotional right now. We’re seeing irrational selling,” said Jose Vistan of AB Capital Securities.

Ayala Land plunged 7.8 percent to P5.90 while Megaworld, dropped nine percent to 81 centavos and Filinvest Land sank 6.7 percent to 42 centavos.

Philippine Long Distance Telephone was off 4.8 percent to P2,185.

San Miguel A fell 5.4 percent to P43.50 while its B shares were down 6.4 percent to P44.

Traders said technical data now indicate strong support for the index at 1,800 points, suggesting further weakness unless Wall Street recovers.