Stocks slide on COVID-19 fears

A whopping P663 billion worth of wealth was wiped out in the local stock market on Monday as panic-selling due to the coronavirus (COVID-19) contagion and the meltdown in global oil prices dragged local equities to their worst single-day bloodbath since the US-epicentered global financial crisis 12 years ago.

Diving deeper into bearish territory and tracking the relentless dumping of equities across global markets, the Philippine Stock Exchange index (PSEi) shaved off 457.77 points or 6.76 percent to close at 6,312.61.

This marked the PSEi’s steepest decline since Oct. 27, 2008, when it lost 12.27 percent during the global financial crunch that caused a shakeout in Wall Street.

The day’s close also marked the PSEi’s weakest finish since President Duterte assumed the presidency in 2016.

The P663-billion reduction in PSE’s market capitalization on Monday was equivalent to about 3.8 percent of the country’s gross domestic product. The paper loss brought total market capitalization down to P11.5 trillion.

Risk aversion intensified as local transmission of COVID-19 prompted the government to declare a “code red,” deemed as a “preemptive call to ensure that national and local governments and public and private health care providers can prepare for possible increase in suspected and confirmed cases.”

“It’s still difficult to determine when PSEi will be resuscitated,” said Astro del Castillo, managing director at First Grade Investments. “The worsening health crisis worldwide and its consequences to the global economy are enough reasons for investors to dump their shares today. A clearer government continuity program could ease the nerves of investors.”

“We believe that the market will remain in a defensive mode this week. Global markets are in turmoil because of the coronavirus scare, dampening market sentiments at a time when companies are reporting earnings,” said Jose Vistan, head of research at AB Capital Securities.

Christopher Mangun, head of research at AAA Equities, said the “nightmare” in Asian stock markets came after crude oil prices saw their biggest one-day drop in recent history.

“The sudden decrease in the demand for oil due to the coronavirus was already driving prices lower but the lack of cooperation between oil-producing countries has pushed the price over the edge. Russia and Saudi Arabia both plan to boost oil production despite dampened demand,” he added.

“Investors went into a selling frenzy, unloading everything they could as fears of a massive COVID-19 outbreak develop. This panic selling may continue till the end of the week,” Mangun added.

Vistan said the next support level would be near 6,200. This is the level where “bargain opportunities will surely be bountiful,” he added.

All counters were heavily battered, led by the financial counter, which nosedived by 8.56 percent.

Value turnover for the day amounted to P6.3 billion. Some P839 million worth of net foreign selling aggravated the day’s selloff.

There were 204 decliners that dwarfed 30 advancers.

Some blue chip stocks slid by a double-digit pace. Ty family-led conglomerate GT Capital slumped by 13.8 percent, while port terminal operator ICTSI, which has a global footprint, plummeted by 12.75 percent.

Metrobank, BPI, JG Summit and Security Bank all shed over 10 percent of their value.
BDO and URC tumbled by over 8 percent, while BDO and Jollibee lost over 7 percent.

Ayala Corp. and SM Prime fell by over 6 percent.

Megaworld fell by 5.88 percent while Ayala Land and SM Investments declined by over 4 percent.

Metro Pacific and PLDT lost over 3 percent.