COVID-19 fears, Pogo crackdown push market back to bear territory

The local stock market slipped back to bear territory on Monday as the crackdown on Philippine offshore gaming operators (Pogos)—an industry that mostly employs and caters to Chinese nationals—added to lingering concerns over the coronavirus (COVID-19) epidemic.

Broadcasting giant ABS-CBN bucked the day’s downturn, rising by 16.99 percent, on rising hopes that it would find a way to continue operating beyond the expiration of its franchise in March. Whether it’s the Congress giving in to pressure or the National Telecommunications Commission granting a provisional license, the thinking is that President Duterte’s earlier threat to shut down the network would not happen.

ABS-CBN, however, is not part of the main-share Philippine Stock Exchange index (PSEi), which tumbled by 182.34 points or 2.47 percent to close at 7,187.44.

The local stock barometer has fallen by 1,870.56 points or 20.6 percent from its peak of 9,058. To confirm reversal to a bearish cycle, the PSEi must stay below the 7,250 threshold for three or four months.

Elsewhere in the region on Monday, trading sentiment was gloomy as COVID-19 fears escalated. The epidemic, whose epicenter is the city of Wuhan in China’s central province of Hubei, has now infected close to 80,000 people and claimed 2,600 lives around the world.

Locally, however, investors are digesting the impact of the fresh crackdown on Pogos on the domestic economy, especially on the property and consumer sectors.

Joseph Roxas, president of Eagle Equities, said concerns on China’s cancellation of passport of Chinese nationals had dragged down market sentiment.

Many of the country’s big property developers have varying degrees of exposure to Pogos. “From China’s perspective, all of Pogo is illegal,” Roxas said. “So if it’s true that they canceled 300,000 passports, that has a significant impact.”

Although there is no official pronouncement on how many Chinese passports had been canceled, there are rumors that this had reached 300,000.

All counters ended in the red, led by the financial, industrial, holding firm, mining/oil and property counters which all slumped by over 2 percent. INQ