Local stocks yesterday succumbed to the worst bloodbath in the Philippine bourse’s history as COVID-19-weary investors hoarded cash after a two-day market shutdown, making corporate Philippines poorer by P1.16 trillion in a single day.
The main-share Philippine Stock Exchange index (PSEi) crashed by as much as 1,296.22, or 24 percent, in early trade to fall below the 5,000 barrier, before trimming losses at close. The selling frenzy slashed 711.95 points, or 13.34 percent, to bring the local stock barometer to an eight-year low of 4,623.42. The local bourse became the worst performer in the region for the day.
“What we saw today is historic and unprecedented with wild intraday swings of more than 700 points. Market disruptions, despite good intentions, have their consequences. In our case, it was another circuit breaker-induced halt at the resumption of trading,” said Jose Vistan, head of research at local stock brokerage AB Capital Securities Inc. “The COVID-19 scare continues to be the main catalyst that’s driving market volatility. COVID-19 brings both certainty and uncertainties. What is certain is it has affected the economy in every way possible. What is uncertain is when this pandemic will end,” Vistan added.
“After two days of no trading, the main index opened much lower as investors rushed to sell, triggering a circuit breaker in the first few minutes of trading,” said Christopher Mangun, head of research at AAA Equities.
Bargain hunters picked up stocks at the day’s low, allowing the PSEi to reduce its losses but Mangun noted that despite equities becoming undervalued, investors were still in a state of panic and confusion.
“This sell-off will continue until we see some improvement on the containment of the COVID-19 virus on our shores,” Mangun said.
At the closing level of 4,623.42, the PSEi has hit its lowest level since January 26, 2012. Since the start of this year, the index has given up 40.84 percent. It has now fallen by 49 percent from its all-time high finish of 9,058.62 on January 29, 2018.
“Investor sentiment remains on risk-off and remains fragile as global financial markets fall due to the virus pandemic. Monetary stimulus is not pacifying the markets. Also, the rising cases locally add to the worries. We need more fiscal action to counter the virus impact. How do you spark confidence when there are rising cases?” said BDO Unibank chief strategist Jonathan Ravelas.
As the market struggles to find the bottom, Ravelas said the next support levels should be at around 4,150 and 4,000.
The P1.16 trillion worth of fortune that disappeared from the stock market on Thursday was equivalent to about 6 percent of the country’s gross domestic product.
The country’s two most valuable companies—conglomerate SM Investments Corp. and property giant SM Prime Holdings Inc.—are now trading below their previous market capitalization of over P1 trillion each.
The most battered was the mining/oil counter, which slid by 17.74 percent. The financial counter lost 15.38 percent while the industrial and holding firm subindices lost over 13 percent.
The property counter fell by 12.51 percent, while the services counter slumped by 11.61 percent.
Value turnover for the day amounted to P9.42 billion. There was heavy net foreign selling amounting to P2.4 billion.
“We now see values that are very attractive for long-term investors. Buying now with one to two-year time horizons may already be a profitable venture. Still, we caution investors to remain vigilant and follow developments related to the COVID-19 pandemic. What we need to see is a breakthrough,” Vistan said.
There were 211 decliners versus only eight advancers, while 21 stocks were unchanged.
The worst-hit among blue chips is Jollibee, which lost nearly a quarter of its value, while BDO Unibank, Ayala Corp. and Bloomberry all dived by over 22 percent.
Property giant Ayala Land lost 20.3 percent while Megaworld tumbled by nearly 18 percent. ICTSI declined by 15.88 percent.
Meralco and Metro Pacific both plummeted by over 13 percent while JG Summit lost 12 percent. Metrobank fell by 10.34 percent.
The day’s most actively traded company was SM Investments, which fell by over 9 percent, along with Globe Telecom and Aboitiz Equity Ventures.