Stock slump wipes out gains for 2013

Peso trading at three-year low of 44.75 to a dollar

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Photo by Noy Morcoso lll/INQUIRER.net

Local stocks on Wednesday wiped out all gains for the year while the peso depreciated to a three-year low against the dollar as rising global oil prices triggered by geopolitical tension in the Middle East heightened risk aversion across global markets.

The main-share Philippine Stock Exchange index (PSEi) slumped by another 178.93 points or 3.02 percent to close at 5,738.06. The market is now trading at its lowest level for 2013 and lagging its end-2012 level by 1.3 percent, reversing as much as 27 percent in gains earlier in the year.

The peso, on the other hand, lost 25 centavos to close at 44.75 to $1 yesterday, weaker than the previous close of 44.50: $1.

A confluence of external and domestic events—the tension in Syria, risks of the US Federal Reserve’s tapering and snowballing concerns among local middle-class taxpayers on the misuse of public funds—kept the bears in control of the local market, according to traders.

“The brewing conflict in the Middle East and the spike in oil prices fueled the selloff. Most markets are down as well. Everyone is racing to the exits,” said fund manager Astro del Castillo of First Grade Finance.

“We have to take into consideration that anything choking the supply of oil will always cause knee-jerk reactions,” a foreign exchange trader said, commenting on the peso’s fall.

BDO chief market strategist Jonathan Ravelas said the peso might weaken to 45.30: $1 in the coming weeks after breaching its resistance level of 44.70: $1. He said BDO might revise its full-year forecast for the peso to 43.50-44: $1 from the previous 42.10 to a greenback.

Meanwhile, the PSE is set to overhaul its 30-company main stock barometer to include conglomerates GT Capital Holdings Inc. and LT Group Inc. starting Sept. 16 this year.

The two companies will replace utility firm Manila Electric Co. and leisure estate and gaming firm Belle Corp.

The local stock barometer fell by close to 6 percent in early trade yesterday but found support at the 5,500 level as the steep fall in the last two days attracted some bargain-hunting.

The United States and its allies plan to take action against Syria, which was accused of using chemical weapons on its people, causing risk aversion across stock markets around the world.

Domestically, concerns are rising on the brewing pork barrel scam in the country as some traders see this affecting the administration’s capability to implement infrastructure programs. “The local thinking is that the pork problem is bigger than we perceive,” said veteran stock broker Ismael Cruz, president of IGC Securities. “It’s so pervasive. Foreign perception may see this, too.”

The Philippines is set to release its second-quarter economic report today. Market consensus points to a 7.3-percent GDP expansion in the second quarter.

The peso’s close Wednesday was the weakest since Sept. 2, 2010, when the unit closed at 44.95 against the greenback. The local currency opened weaker at 44.60: $1, but reached an intra-day high of 44.53: $1 before closing at its lowest point of the day.

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  • Jake Lopez

    A weak peso is actually good for our economy as our exports will become cheaper, money remitted will go much longer, and best for the tourism industry too. A strong peso is good only if the government has enough funds to pay off our debts, or if the business world takes advantage of it by retooling and buying more productive machineries. A strong peso makes imports cheaper, leaving no incentive for local businesses to produce. It makes petroleum products cheaper which is an incentive to waste these precious commodity.

  • disqus30

    I think the problem with the Philippine economy is its’ lack of good manufacturing sector. It is too dependent on import and OFW remittances.

  • concern_netizen

    We succeeded in getting money from foreign investors kahit na hot money. Money that could have otherwise invested in other competing capital markets. Ano reklamo natin? Nakinabang naman tayo lahat.

    SOME Filipinos who chose to live abroad want to see our country rot to justify their decision to leave the country. Somehow it is relief for them to say “Buti na lang umalis ako”.

    Kulang pa na iwan ang bansa natin, kelangan pang sadyaing siraan tayong nagnanais umusbong ang buhay natin sa Pinas. Kung masama loob niyo manirahan diyan, walang pumupigil sa inyong umuwi. Madaling intindihin na sa laki ba naman ng sakripisyo niyo, pananagutan niyo na yan. Pero utang na loob, makiisa naman kayo sa pagunlad ng bayan.

    • philspratly

      tama !!

  • http://www.yellowmythbusters.gov.ph/ Weder-Weder Lang

    Hot money outflow => Peso weakens => Mideast tensions => Fuel prices go up

    Perfect storm.

  • Guest

    You can delete all posts critical to this administration for all we care. But it only proves that the truth hurts, PNoy.

    Here’s one proof: You may have successfully swept the Inekon extortion issue under the rugs and filipinos easily forget it but your grave concern is not the people.but the foreign investors. Remember that the Inekon issue is all about foreign investment/contracts. Such evidence of corruption cannot be covered from the knowledge of foreign investors no matter how hard you try.

    Why? Because the whistle blower is not a conspirator like the pork barrel scams. The whistle blower is no other than Ambassador Josef Rychtar of Chezch Republic himself who has no vested interest whatsoever.

    Admit it. This is one cause that foreign investors are heading for the exit that is, unabated corruption in your administration, Pnoy.

  • acidicboy

    “The Philippines is now open for business!” – said the man who doesn’t know Economy 101.

    • concern_netizen

      The intention was to attract foreign investors to bring their money to us. Whats wrong with that??? Its Marketing 101, not Econ 101.

  • KappaPhiPhi

    for the past 3 days, we are the worst performimg bourse in se asia. it’s only temporary. but if we take in what noynoy said before about the correlation of his good governance to the time the stocks were on historic high, then it’s all p r. the ppp is still stalled. corruption has not improved. and smuggling is in a historic high. talo pa si erap and gma.

  • Iggy Ramirez

    If we have started paying for the purchase of a condo unit and say, a crisis similar to 1997 happens, and in a stroke of bad luck the developer declares bankruptcy, do they return the money, or we can simply say bye bye to it?

    • novaliches

      most probably the latter.

    • philspratly

      chances are : bye bye but if your developer is a well known solid developer, you should be alright.

  • klepto

    Malapit na mabalik ang 1$=PHP60. Har har har har har

  • Spokesman2

    H aha ha what gain? Fake naman yang nonoy economy nayan , pang election lang yan.

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