Stocks slump on China risks

Local stocks took their worst beating this new year on Thursday as renewed concerns on China’s foreign exchange and stock markets triggered a bloodbath across the region.

The Philippine Stock Exchange index (PSEi) lost 195.02 points or 2.86 percent to close at a nine-month low of 6,618.88 following China’s latest move to slash the reference rate of the renminbi (RMB), which in turn sparked a regional stocks selldown. This was the lowest closing for the PSEi since April 28 last year when it closed at 6,604.35. It was also the steepest single day drop since Aug. 24 last year—also called the “Black Monday”—when the index slid by 6.7 percent as concerns on China caused a global stock market meltdown.

“This market is really for the brave. Most investors were devastated today but for some it’s an opportunity to accumulate. Expect a relief rally tomorrow or the next day,” said Astro del Castillo, managing director at local fund management firm First Grade Finance.

On Thursday, the Shanghai stocks index tumbled 236.84 points or 7 percent, prompting a trading halt. This was after China’s central bank lowered the value of the RMB by 0.51 percent against the dollar, the biggest depreciation since August last year when a surprise 5-percent devaluation in a week spooked global markets.  Doris Dumlao-Abadilla