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By Likha C. Cuevas-Miel, Reporter
THE stock market fell to its lowest level in
over a year in step with other Asian bourses, which tumbled due to
uncertainties on how deep and long the global financial crisis will
run and last, analysts said.
At the Philippine Stock Exchange, the composite
index—the benchmark of all share prices of listed
companies—fell by 3.88 percent or 112.85 points to 2,793.68 from
Friday’s close. According to the local bourse, it was the lowest
close after it ended at 2,788.46 points on November 30, 2006.
The all-share prices closed at 1,726.52 points
or 3.25 percent lower with trading volume reaching 692.4 million at
a value of P2.2 billion. Losers beat gainers by 118 to 5 while share
prices of 26 firms remained flat.
An analyst told The Manila Times that the buyout
of investment bank Bear Stearns for only $236 million or $2 per
share by rival JPMorgan Chase was just a part of the bigger shake-up
in the world’s financial markets. Bear Stearns, one of the
world’s biggest investment bank, was forced to get an emergency
loan after it was crippled by risky investments on securities backed
by subprime mortgages, which are basically loans given to customers
with poor credit history.
“The issue is still about the subprime [mess,
which] is far from over and there would be more buyouts and
acquisitions waiting in the sidelines,” the analyst said.
Jason Lagrimas of 2Trade Asia said the
developments in the US pose a bigger question on whether the actions
of the US Federal Reserve are enough to stave off a bigger financial
and economic crisis.
He also said that further cuts by the Fed is
also a concern for other markets since it would force funds to flee
to safer havens like Asia. This brings more pressure on local
currencies to go up against the weakening dollar at a time when
central banks are faced with rising inflation due to skyrocketing
oil and other commodity prices.
Monday’s closing level breached the index’s
support level of 2,880 points. Lagrimas said investors have to shift
positions due to mounting pressure to cash in on gains as the
Philippines and the rest of Asia remain hostage to Wall Street.
Ed Bancod of ATR KimEng Securities Inc. said the
local market “just broke down” on Monday on fresh concerns that
“there could be more out there” and on fears that asset values
of other investment houses will crumble.
“(Monday’s fall) was influenced by elements
of uncertainties. It is not knowing how deep and how much damage
this liquidity problem has inflicted,” he said.
Bancod said investors are re-evaluating their
assets after the Bear Sterns incident. Its assets were valued at
$159.36 per share at its peak, he said.
Access to funds or liquidity would be tighter as
firms become “suspicious of each other.” When that happens,
“the wheels of commerce will grind to a halt,” Bancod said.
At the Philippine Dealing System, the peso fell
to a three month low Monday due to falling equity markets and
tightening credit, a trader said.
The local currency ended at 41.72 from
Friday’s 41.54 finish. Trading volume reached $794.225 million
from the previous $640 million.
The trader said the local currency’s weakness
was expected following the news of the sale of Bear Stearns and the
likelihood of another emergency rate cut by the Fed.
Topping that off is a long Lenten break starting
Thursday, he said
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-- With Chino S. Leyco
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