MANILA, Philippines (Update 2, 4:25 p.m.) — Following a two-day halt in trading due to the Luzon lockdown, Philippine shares collapsed anew Thursday, posting its biggest decline on record as investors search for more government measures to support an economic bounceback from the impact of the coronavirus.
The local bourse sank 711.95 points or 13.34% to end its first day of shortened trading at 4,623.42, closing at its lowest level since Jan. 26, 2012 when the index finished at 4,611.68. All subindices ended in red.
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The brutal sell-off wiped out P1.14 trillion off the Philippine stock market. Foreign selling stood at P6.7 billion.
Shortly after the opening bell, the benchmark Philippine Stock Exchange index (PSEi) plummeted as much as 24%, the biggest decline on record, forcing regulators to step on the breaks yet again to allow investors time to rethink investment positions. Trading resumed after 15 minutes at 9:45 a.m.
"We were kind of expecting that the market would open quite low, especially after a two-day halt in trading," PSE President Ramon Monzon said.
The Philippines became the first in the world to indefinitely suspend trading after President Duterte sealed off the entire island of Luzon starting Monday evening, a drastic measure imposed over the region responsible for nearly 70% of the country's economic output, in order to contain the spread of coronavirus disease-2019 (COVID-19).
As of Wednesday evening, the Philippines reported a total of 202 infections. Of the confirmed cases, 17 died while seven recovered.
The lockdown, which also imposed nine-hour curfews in the entire island of 61 million people, halted trading over the past two days before regulators secured exemption from an interagency task force managing the disease control to re-open under a skeletal force. However, trading had been shortened to four hours from the original seven hours until further notice.
"Shares plummeted as investors worried about the economic damage from the pandemic," said Luis Limlingan, head of sales at Regina Capital, adding that falling global oil prices helped create a perfect storm for local equities.
Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said investors are beginning to lose confidence with how the government is handling the outbreak. "Monetary stimulus is not pacifying the markets...We need more fiscal action to counter the virus impact," he said in a text message shortly before the market closed.
Trading ended hours before the Bangko Sentral ng Pilipinas (BSP) is highly expected to slash key rates by as much as 50 basis points to prompt banks to lower interest in their loans, encourage more lending to consumers and businesses and drive economic activity. While the BSP's looming action is commendable, Ravelas said the Duterte government needs to do its part.
The government "needs more" than the P27.1-billion economic package unveiled last Monday, he said.
Meanwhile, Monzon said he was in talks with local regulators to implement measures to stem market volatility, which could include additional intraday trading suspensions to calm the market. Earlier, Finance Secretary Carlos Dominguez III ordered state pension funds to buy more shares to alleviate PSEi's bleeding, a strategy that appears to be not working. — with AFP