PSEi suffers first 2021 rout on coronavirus variant anxiety
MANILA, Philippines — Anxieties over a fast-spreading variant of the coronavirus have triggered this year's first major sell-off in the local stock market with investors fearing that the more infectious mutation could derail the economy's fragile recovery.
Panic returned to the Philippine Stock Exchange trading floor on Wednesday, with the main index shedding 1.21% to close at 7,047.85. The broader all-shares index, meanwhile, dropped 1.02%.
The reported new variant of the virus “poses another risk of a stricter lockdown should cases escalate and that’s something the economy can’t afford,” Jonathan Ravelas, chief market strategist at BDO Unibank, said in a text message.
Arielle Santos, equity analyst at Regina Capital, agreed with Ravelas. "So basically, investors are taking a step back figuring out the next best move to defend their portfolios from turning red," Santos said.
Investors were reacting to news the more contagious variant from the UK could have already potentially entered the Philippines after Hong Kong officials traced a case in the autonomous city to a traveller from Manila.
Apart from public health risks, analysts said investors are worried the more dangerous variant could trigger a new round of stringent lockdowns that would only exacerbate the ongoing economic recession and historic high joblessness.
But on the same day, the Department of Health quickly dispelled worries, saying the variant had not been detected at home currently shut off from tourists coming from 21 nations, including the UK and the US, where the mutated virus is spreading. That travel ban will run until January 15.
On Wednesday, foreign investors turned sellers, yielding a net foreign selling of P685.4 million. A total of 22.7 billion shares valued at P11.9 billion switched hands during the trading day.
For Ravelas, this is a good time for investors to pick up names that were badly beaten by the sell-off. “For those light on the market, it’s an opportunity to go bargain hunting," he said.
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