Stocks, peso weaken on Trump fears

The local stock market tumbled sharply Wednesday, tracking a global financial market bloodbath as investors braced for a Donald Trump presidency in America.

The Philippine Stock Exchange index (PSEi) shed 188.76 points or 2.58 percent to close at 7,119.04 as Trump’s poll victory shocked global markets.

One stock that benefited from news of Trump’s poll victory was Century Properties Group, which surged by 20 percent. The company has a branding deal with Trump for a $150-million upscale residential project. Ahead of the US elections, President Duterte named company chair and founder Jose Antonio special envoy to the US.

The peso slightly slid against the dollar alongside weakness across regional currencies following Trump’s win, which the Bangko Sentral ng Pilipinas said could be a “global political risk.”

The domestic currency weakened to close at 48.59 to $1 from Tuesday’s close of 48.58:$1, staying at a seven-year low level.

At the Philippine Dealing System, the peso hit an intraday low of 48.85 against the dollar and a high of 48.57 after opening at 48.62. The total volume traded rose to $691.9 million from Tuesday’s $549.6 million.

“Regional currencies including the peso fell on renewed risk aversion surrounding market surprise in early results showing a Trump victory,” BSP Governor Amando M. Tetangco Jr. said in a text message to reporters.

Also, “market cautiousness on a possible retreat of the Fed from a December hike because of this market reaction is weighing on regional currencies,” Tetangco added.

“We will continue to closely monitor developments and provide liquidity to the market as needed to address market price action on renewed global political risk,” according to Tetangco.

“The (stock) market lost 2.5 percent in line with the region as Donald Trump’s apparent election victory was met with concern by investors. The main worry seems to be his ‘America first’ rhetoric, which is viewed by many as anti-trade,” said Manny Lisbona, president of PNB Securities.

Lisbona said the silver lining, however, was that the odds of a rate increase in December had declined to 50 percent from 82 percent, based on some news reports.

“Local markets sold off furiously as the Republican candidate seems destined for an upset victory as of 3:30 pm. The PSEi took its cues from performances of Asian bourses as well as the futures market, wherein the Dow (futures) slid as much as 860 points,” said Luis Gerardo Limlingan, managing director at Regina Capital Development.

“Trump has promised a big change in the corporate sector and huge capital spending via infrastructure, leading to hiring and wage pressure. Massive tax cut is also promised. Foreign policy skill, which is clearly lacking, will be a test to the new administration. We can expect immediate flight to safety with gold and US treasuries being bid up,” Limlingan said.

The PSEi was led lower by the property counter, which fell by 3.47 percent, while the industrial and holding firms counter slipped by more than 2 percent. The services and financial counters fell by over 1 percent. Only the mining/oil counter rose, but by just 0.15 percent, as gold mining firms Lepanto and Philex advanced. Gold is deemed a good hedge against global economic uncertainties.

Investors dumped shares of URC (-6.76 percent) and ICTSI (-5.26 percent), two Philippine companies with sizable overseas businesses.

Ayala Land, Ayala Corp. and Megaword all fell by more than 4 percent while Metrobank, GT Capital and Jollibee all slid by more than 3 percent.

SM Prime, SM Investments Corp. and Metro Pacific Investments all slid by more than 2 percent while BDO and JG Summit declined by over 1 percent.