PSEi falls 5% on global recession fears
MANILA, Philippines—Local stocks succumbed to a bloodbath on Friday, bringing the main index to its worst single-day slump in three years, as concerns over global growth dragged global equities back to bear territory.
The main-share Philippine Stock Exchange index slid by 210.14 points or 5.13 percent to finish at a six-month low of 3,885.96. This was the steepest drop seen by the main local stocks index since October 27, 2008, when it declined by 12.3 percent.
The index has reversed earlier gains for the year and is now 7.5 percent below its end-2010 level.
All counters were sold down but the mining/oil and property counters were the most battered, outpacing the PSEi’s drop by falling 9.87 percent and 6 percent, respectively.
Value turnover was heavy at P8.2 billion, including some block sales. There were nearly 13 stocks that declined for every single stock that advanced. Foreign selling exceeded foreign buying by P270 million.
“The 3Rs continue to feed the bears – recession fears on the global economy, renewed risks in the capital markets especially with possible default of European countries and the continuous retreat of investors to safer investment instruments,” said Astro del Castillo, managing director at local fund management firm First Grade Holdings.
“Fundamentally, we are stable but definitely not immune to the realignment of fund managers,” he said.
But the day’s decline was also seen as an opportunity for bargain hunters.
“The market crashed but that opens up the opportunity of buying profitable companies at bargain prices. I’m not going to catch this falling knife tomorrow but investors should start getting excited over better valuations,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza & Co.
Investors dumped index stocks PLDT, Metrobank, Semirara, ICTSI, AGI, EDC, ALI, BDO, SM Investments, Ayala Corp., Philex, BPI, Aboitiz Power, SM Prime, DMCI, San Miguel Corp. and Megaworld. Likewise heavily sold down were Lepanto A (open only to local investors) and B (open to both local and foreign investors) as well as Atlas.
There were block transactions on Rizal Commercial Banking Corp. (P1.29 billion at P29 per share), Polar Property Holdings (P69.6 million at P2.32 each), First Philippine Holdings (P144 million at P55.4 each) and Security Bank (P62.57 million at P87.49 each) .
Overnight, the Dow Jones Industrial Index tumbled by 391.01 points or 3.5 percent to 10,733.83 as fears over another US recession fuelled risk aversion. A decline in China’s factory output for the third straight month added to jitters over global growth.
For the first time in two years, the MCSI All-Country World Index of 45 nations succumbed to bear territory.
“Risk-off sessions were seen with intensifying worry about double-dip recession,” said European investment bank Credit Agricole CIB.
“Markets continue to be volatile; growth concern weighs further on sentiment,” it said.
