Stocks plummet to 1-year low

Geopolitical conflict, rising inflation

MANILA, Philippines — Local share prices further went south yesterday, triggering a bloodbath not seen in over two years, as investors dumped their holdings on fears of escalating US-China trade confict and rising inflation at home.

The benchmark Philippine Stock Exchange index (PSEi) fell by as much as 3.3 percent, the biggest one-day drop since January 2016. Most Asian stocks were up yesterday.

The PSEi plunged 110.89 points, or 1.42 percent, to settle at 7,682.24, while the broader All Shares index lost 54.93 points, or 1.16 percent, to finish at 4,665.65.

According to the PSE, yesterday’s close was the lowest level since April 27, 2017 when the index settled at 7,661.01.

Market investors dumped their holdings, with net foreign selling reaching P8.05 billion. Foreign buying was at P5.39 billion. Total value turnover reached P11.76 billion.

Decliners outpaced gainers 171 to 58.  Thirty-one issues were left unchanged.

All counters ended in negative territory except for the financials index, which gained 9.92 points or 0.50 percent.

According to Wealth Securities Inc., the PSEi is the second worst performing market in the world, next only to Venezuela, which is having a debt crisis and hyperinflation.

Harry Liu, president of Summit Securities Inc. said the market plummeted due to a host of uncertainties including the possibility of a trade war between the US and China, the escalating tensions between Western powers and Syria and rising interest rates.

As for rising interest rates, the US Federal Reserve  may raise increase interest rates throughout 2018, but higher interest rates usually spook market investors as it means companies will have higher borrowing costs and would thus translate to lower dividends to investors.

Here at home, market investors are also watching rising inflation and the next move of the Bangko Sentral ng Pilipinas.

But Summit’s Liu said all is not lost and that the market is likely to consolidate in the latter part of the year.

“I see yesterday’s move as a technical issue…the market as a whole is going to balance the situation,” Liu said.

Thus, he said, things may improve in the third and fourth quarters.

Luis Limlingan of Regina Capital said there was not enough stimulus from regional markets.

“All the negativity was brought upon by a large net foreign selling figure of P2.7 billion which plagued the index the entire day,” Gio Perez, a trader at Papa Securities also added.