Plummeting oil prices weaken stock market

CEBU, Philippines - While the benefits of the unexpected drop in global oil prices have already trickled down to the consumers, the event however may not be at all positive for the local stock market.

Marco Nino Velasco of UniCapital Securities, Inc. noted the falling energy prices would continue to stimulate greater volatility in the market.

 Velasco told The FREEMAN investors might be losing confidence towards oil companies because of the presumed bad sentiment arising from the plunging crude oil prices in the world market.

 “[This event] is directly related to earnings of oil firms in particular; poor earnings will relate to poorer stock prices,” Velasco, business development officer, said.

 He further noted local shares are likely expected to be unstable in the short-term.

 He pointed out this global economic shock could potentially affect oil and oil-based companies and that investors might be weighing up of its overall impact on the market.

 On Wednesday, the bellwether Philippine Stock Exchange index fell by 194.17 points or 2.71 percent to 6,966.21; while all shares index also plunged by 95.22 points or 2.25 percent to 4,132.40.

 But stock analyst Lexter Azurin of USI expressed optimism the Philippine economy is bound to benefit from the sliding oil prices because the country is a major oil importer.

 So despite the temporary weakness of the capital market, Azurin said the nation’s consumer economy could be enjoying the surprising big drop in energy prices this time.  (FREEMAN)