PSEi slips into bear territory, slumps to 7,200 level

The local stock barometer slipped to bear territory on Friday as the worsening coronavirus contagion spooked global markets, adding to a string of domestic concerns.

The main-share Philippine Stock Exchange index (PSEi) slumped by 191.89 points or 2.6 percent to close at 7,200.79.

The index has now gone down by over 20 percent from the record high of 9,058.62 recorded on Jan. 29, 2018.

To confirm a reversal of the 11-year bull cycle, the index must stay within the bear zone for two to three months.

Joseph Roxas, president of Eagle Equities Inc., said a string of concerns was weighing down the market—the uncertainties over Metro Manila’s water concession, the recent Taal volcanic activity and what he described as “unfounded” global panic over the novel coronavirus. There was heavy net foreign selling amounting to P1.7 billion for the day.

Stocks in emerging Asian markets may continue to be bludgeoned by the coronavirus outbreak in the coming weeks as the economic drag on China, the epicenter of the contagion, could be greater now than during the 2003 SARS episode, global investment house Franklin Templeton Investments said.

In a Jan. 28 commentary, Franklin Templeton said that given expectations of further escalation in the numbers of infections and deaths related to the coronavirus, anxiety, nervousness and market pessimism internationally should increase globally in the short term.

“In sum, the situation remains fluid and is expected to worsen in the near term. The rapid development of the 2019 corona virus has brought some uncertainty to the near-term global growth outlook. However, in our current assessment, downside risks are biased toward the short term, while our long-term market and economic outlook remains intact,” the investment firm said.

While travel restrictions have been put in place, Franklin Templeton said risks of further international spread persisted, and the reach and severity of the situation may not be known for another few weeks.

“China is much more integrated into the global economy than it was in 2003, and the number of Chinese nationals traveling all over the world has doubled over the same period, which raises the risks to the global economy and health,” it said.

At the local market, the index was weighed down most by the industrial counter, which fell by nearly 4 percent, while the financial counter declined by 3.45 percent.

Value turnover for the day improved to P8.3 billion.