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PANIC selling hit the stock market, while the peso fell sharply on
Tuesday on growing risk aversion, as investors feared a looming US
recession would pull down the rest of the world.
At the Philippine Stock Exchange, the composite
index—the barometer of stock price movements of listed
companies—dropped for a seventh session, shedding 5.52 percent to
2,978.41 points.
It was the market’s biggest single-day loss in
five months and its longest losing streak since August last year,
traders said.
The all shares plunged by 4.96 percent to
1,855.39 points.
Losers beat gainers by a wide 150 to 6, while
only 11 stocks were unchanged. Trading volume reached 3.032 billion
shares worth P4.37 billion.
Ayala Land Inc., the country’s biggest
property developer, lost 75 centavos to P13.25.
Metropolitan Bank and Trust Co., the country’s
biggest bank by assets, was down one at P42.
SM Investments Corp., the country’s
second-largest conglomerate, fell P20 to P267.50.
Philex Mining Corp., the country’s biggest
gold and copper miner, lost 70 centavos to P8.00.
Manila Electric Co., the country’s biggest
power distributor, fell P1.50 to P70.
Food and drinks giant San Miguel Corp.’s
A-shares, reserved for Filipinos, fell one peso to P54. Its
B-shares, which have no ownership restriction, lost one to P54.50.
“This is already panic-selling,” said
Conrade Bate of online stockbroker CitisecOnline.
“In this time of uncertainty, it would seem
unlikely for any one market to buck the regional trend ... which now
appears to have grown to a worldwide contagion,” said Francisco
Liboro of PCCI Securities.
“The index may hit 2,800 points at which level
the selling may stop. We can’t expect the market to keep going
down by 3 percent or more everyday. It has become extremely
oversold,” said Jose Vistan of AB Capital Securities.
The index has fallen nearly 15 percent over the
past seven sessions and is down almost 18 percent so far this year.
Chelsea Dipasupil of RCBC Securities Inc. said
share prices were largely affected by the sentiments on the slowing
US economy, largely ignoring the stimulus plan the Bush
administration laid down to save the country from a recession.
European markets closed 50 points lower
overnight while the Dow Jones industrial average and Standard &
Poor’s futures were down by 5.1 percent and 5.3 percent to 11,485
and 1,255, respectively.
Other Asian markets also slipped, with Japan’s
Nikkei 225 index falling by 5.7 percent—the biggest percentage
drop in almost 10 years—to 12, 573.05. Sydney’s benchmark index
dropped by 7.1 percent—the fastest in almost 20 years—while Hong
Kong suffered a 58.7 percent fall. The Shanghai composite index, one
of the fastest rising, also lost 7.2 percent.
Investors have taken to the sidelines as they
wait for the US Federal Reserve to cut its key interest rates later
this month. Stock prices would continue to move southwards as
investors wait for a convincing catalyst that would raise hopes that
the world’s biggest economy would not continue to spiral down,
Grace Cerdenia of 2Trade Asia, said.
“[Tuesday’s fall] is a reaction based on
pessimism hounding the developed markets. Tonight we’ll see
whether the selling overhang has subsided,” the analyst said.
Traders would be treading the volatile markets
cautiously the following days as they would get their buying signals
from abroad. However, any catalyst that would be announced at this
point would be not enough to spur buying since “emotions still run
high,” fueling extreme pessimism, Cerdenia said.
Despite the bleak outlook, she said the local
market would bounce back, albeit slowly after the “emotional
aberration” has subsided since the Asian and Philippine economies
are sound.
At the Philippine Dealing System, the peso ended
at 41.595 against the greenback, significantly weaker than
Monday’s finish of 41.20. The local currency dipped to a low of
41.60, with volume turnover at a high $847.6 million.
“The weakening of the peso is due mainly to
global risk aversion on emerging assets,” Jonathan Ravelas, Banco
de Oro trader, said.
-- Likha C. Cuevas-Miel, AFP and Chino S. Leyco
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