Investors scrambled to sell out of the stock market on Monday as they braced for a bigger macroeconomic fallout from the reimposition of tighter lockdown protocols in Metro Manila and surrounding regions.
The main-share Philippine Stock Exchange index (PSEi) fell by 212.53 points or 3.59 percent to close at 5,715.92, making it the worst performer in the region. About P1.64 billion worth of foreign funds flowed out of the market on a net basis.
“With the economic growth engine crippled, the continued spread of the virus weighs on any hopes of a recovery. COVID-19, acting like kryptonite to once Super-consumption, has not been removed and the former juggernaut economy is now reduced to a form not seen in decades. Unless the kryptonite is addressed, no amount of alphabet rearrangements to lockdown measures and relaxing of quarantine protocols will jumpstart the recovery,” ING Philippines economist Nicholas Mapa said in a research note.
At the local stock market, investors dumped shares of top companies such as Ayala Land, Jollibee, BPI, Security Bank,GT Capital, SM Prime, SM Investments, BDO and Ayala Corp. as soon as Malacañang subjected the metropolis and other key regions back to modified enhanced community quarantine (MECQ).
“Investors rushed to close positions today after Metro Manila and surrounding cities were placed under stricter quarantine restrictions for the next two weeks. The move caught most investors off guard as the government struggles to restart an ailing economy,” said Christopher Mangun, head of research at AAA Equities.
With daily COVID-19 case count seemingly doubling in a little less than a week and total infections breaching the 100,000 mark, ING’s Mapa said Philippines authorities had no choice but to hunker down and employ drastic measures to slow the spread of the virus.
As such, Mapa said the Philippines was indeed “headed into a severe crash landing with the probability of the economy returning to its former glory any time soon now declining by the day.” The economist said the government must spend yet again to safeguard the lives of its citizens via cash aid and dole-outs, negating any savings made by holding back on spending in the first half of the year.
“Repeated returns to lockdowns will eventually take its toll both on the economy and the fiscal position of the Philippines,” Mapa said.
All counters ended in the red but the property counter was the most battered, losing 5.13 percent.
Ayala Land tumbled by 6 percent, while BPI, Jollibee and Security Bank all fell by more than 5 percent.
SM Prime lost 4.83 percent, while SM Investments, BDO, Ayala Corp., Metro Pacific and JG Summit all declined by over 3 percent.
There were 154 decliners that overwhelmed 51 advancers, while 39 stocks were unchanged.