Financial markets plummet as Ukraine-Russia war rages

MANILA, Philippines — The local financial market suffered heavily yesterday, with the benchmark Philippine Stock Exchange Composite index (PSEi) spiraling downward below the 7,000 mark and the peso shedding another 14 centavos to close at 52.32 against the dollar.

Yesterday’s session saw a sea of red across the trading floor with the main composite index plummeting by 310.34 points to close at 6,977.73, the lowest since Dec. 1, 2021. The broader All Shares index also took a heavy beating, retreating by 127.46 points to close at 3,739.52.

Overall, investors were on risk-off mode, scrambling to cut their losses as the Ukraine-Russia war raged with no end in sight, sending commodity prices to record or multi-year highs, and forcing most analysts to re-evaluate their outlook for the global recovery with some now warning of a period of soaring inflation and low growth or recession.

Most sectoral indexes lost anywhere from three percent to as much as five percent with only the mining and oil sector, benefitting from skyrocketing oil prices, as the last one standing.

Total value turnover reached P12.1 billion. Market breadth was negative with 178 losers against 57 gainers while 21 issues were left unchanged.

First Metro Investment Corp. head of research Cristina Ulang attributed yesterday’s market selloff to “risk-off sentiment due to rising oil prices and higher inflation expectations.”

These factors, she said, are seen to negatively affect economic and corporate earnings growth.

Japhet Tantiangco of Philstocks Financials said overall, investors continued to worry over the possible imposition of sanctions on Russia’s oil exports.

“The said move is expected to lead to a surge in oil prices which would cause inflationary pressures. The depreciation of the peso below the 52 to $1 level also added to the bearish sentiment,” he said.

At the same time, Tantiangco noted that trading was still strong with net value turnover registering at P11.20 billion, or still above the year-to-date average of P7.24 billion.

Not surprisingly, foreign transactions ended in a net outflow of P850.32 million yesterday.

Ayala Land Inc. led yesterday’s roster of active stocks, closing lower by 2.38 percent to finish at P36.90 per share; SM Prime Holdings declined by 5.32 percent to finish at P37.40 per share; BDO Unibank shed 4.62 percent to close at P124 per share; Metrobank gave up 5.06 percent – and ICTSI retreated by 4.37 percent to finish at P219 per share.

SM Investments Corp. lost 4.20 percent while Nickel Asia rallied by 8.68 percent. BPI lost 7.61 percent to close at P91 per share as did telco giant PLDT which lost 0.38 percent to close at P1,842 per share.

Global Ferronickel Holdings, also benefiting from the war-induced surging commodity prices, rose 11.94 percent to end at P3.47 per share.

Of the index members, only Manila Electric Company closed with gains, climbing 1.41 percent to P360.00. Emperador Inc. led the index’s fall, plummeting 10.73 percent to P15.80.

The local currency, meanwhile, opened weaker at 52.25 and strengthened to an intraday high of 52.01 before losing steam and to hit an intraday low of 52.34. Volume was heavy at $1.33 billion, lower than Monday’s $1.58 billion.

Jonathan Ravelas, chief market strategist at BDO Unibank, said further assault towards the 52.50 to 53 levels is underway. “Any pullback if any is limited to the 52 levels,” he said.

Ravelas said the new trading range is between 52 and 53 levels in the near-term instead of the projected 51.60 to 51.90 this week.

Rizal Commercial Banking Corp. chief Michael Ricafort said the peso closed at its lowest level in more than two and a half years or since Aug. 28, 2019 when it ended at 52.321 to $1.

This extended the losing streak of the local currency to five days.

Ricafort said the peso is seen trading between 52.10 and 52.40 on Wednesday. – Lawrence Agcaoili