People stand in a queue to use ATMs of a bank in central Athens, Sunday, June 28, 2015. AP
LOCAL financial markets tumbled on Monday, tracking weak sentiment in the region, as Greece moved closer to a debt default and likely exit the European Union.
The Philippine Stock Exchange index lost 54.67 points or 0.72 percent to close at 7,567.38. Elsewhere in the region, stock markets were in a bloodbath due to risk aversion triggered by the Greek crisis.
The Shanghai and Hong Kong indices were respectively down by over 3 percent and 2 percent. The Indonesian, Malaysian, Singaporean and Korean stock exchanges tumbled by over 1 percent.
At the local spot foreign exchange market, the peso traded between 45.23 and 45.175 against the US dollar, depreciating from friday’s closing of 45.085 against the greenback.
Risk aversion was high across regional markets as Greece started imposing capital controls and shutting down banks on the eve of a June 30 deadline to pay loans to the International Monetary Fund. As of press time, Greece has yet to strike a deal with the IMF and the European Central Bank for a bailout package and avoid a default.
“The Greek situation is clearly unsettling the Eurozone market and is spilling over because of the psychological and negative signalling effects,” PSE president Hans Sicat said in a text message.
“In theory, it should be contained given that the Greek economy and the liabilities are small compared to Euro group. So it will be a question (of) how Asia believes the situation will or will not create contagion,” Sicat added.
“Technically, there should be no direct economic impact to the Philippines as
our trade with Greece is insignificant,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza & Co.
But because the problem is IMF-related, Lacson said the impact on the global financial markets could be substantial and indirectly result in a couple of things that do matter, namely:
– an increase in spreads on credit default swap (CDS) – referring to an insurance-like protection to bondholders, which will make it more expensive for local corporations to secure capital; and
– accelerate share sale and exit by foreign funds from the economy.
Total value turnover for the day amounted to P5.9 billion. There were only 63 advancers versus 109 decliners while 43 stocks were unchanged.
Megaworld led the PSEi lower, falling by over 2 percent. AC, SMIC, Globe, BPI and EDC all declined by over 1 percent.
URC, PLDT, GTCAP, ALI, Metrobank, SM Prime and BDO also contributed to the day’s decline.
On the other hand, DMCI, JG Summit and AP eked out modest gains.
Outside of the PSEi, other notable gainers were VLL (+2.38 percent) and RRHI (+3.38 percent).
Dealers said emerging market stocks were being sold off ahead of the June 30 deadline for Greece to meet debt payments to the International Monetary Fund. Hopes for striking a bailout deal with the European Central Bank are dim.