Bear market in a bullish economy

A “bear market” in financial parlance is a stock market that has declined to at least 20 percent below its highest closing level and remains depressed for a period of time. The Philippine stock market reached that dubious status on Thursday and confirmed it on Friday as indicated by the Philippine Stock Exchange index (PSEi). The market fall added the label, the “worst performing market in Asia” to the list of the country’s perceived economic woes, which already included “Asia’s worst performing currency,” “persistently high inflation,” and “growing current account deficit.”

The index closed at 7,098.15 points on Thursday, down 21.6 percent from its all-time high of 9,058.62 on January 29. To confirm that Thursday’s closing figure truly heralded the start of a bear market period and was not just a disappointing one-day dip, the market retreated a further 0.49 percent to close at 7,063.20 on Friday. The prevailing view among analysts, particularly those watching from afar, is that the “bear market” period is likely to continue for some time.