Volatility was again the norm on Tuesday, with the stock market plunging by nearly 2 percent and the peso hitting a fresh six-year low on renewed investor fears.
The benchmark Philippine Stock Exchange Index (PSEi) dropped by 1.9 percent or 122.48 points to close at 6, 311.60, while the wider All Shares dropped by 1.49 percent or 54.79 point to finish at 3, 624.01.
The peso, meanwhile, closed at P47.99 to $1, losing 11 centavos from Friday. It was the weakest finish for the local currency in six years, based on Philippine Dealing System records starting October 2009.
The declines mirrored results in other Asian markets, with analysts pointing to a renewed drop in oil prices and losses in Europe and the US as a factor.
“Asian currencies are no longer taking their cue from China yuan fixing but more so on the direction of oil prices,” said Nicholas Antonio Mapa, associate economist at the Bank of the Philippines Islands, said.
“Foreign selling in the PSEi whittled down the peso further. Unless we see any substantial change in oil, we may be in these rough waters for a while,” he warned.
Equity analysts said concerns over the Philippines’ fourth-quarter growth results were also behind the PSEi’s plunge.
“The market’s negative sentiment … [was]boosted by rumors that the country’s fourth-quarter GDP (gross domestic product) has slowed down, giving them [investors]an excuse to dump shares rather than purchase,” said Astro del Castillo, president and managing director of First Grade Finance Inc.
However, Jomar Lacson, research head at Campos Lanuza & Company Inc., said: “The stock market’s volatility is more of a global issue . . . the Philippines is not spared from being hit.”
He noted that foreign investors were more concerned about the Jan 26 to 27 US Federal Reserve policy meeting.
Alexander Tiu, analyst at AB Capital, said a minimal increase in US interest rates would not harm the Philippines, while a substantial lift would send foreign investors to the US rather than to emerging markets.
The US central bank is expected to keep interest rates on hold after announcing an increase—the first time in nearly a decade—last December.
All sub-indices were in the red with mining and oil posting the biggest 2.18 percent decline. Total value turnover was P5.839 billion, with losers outnumbering gainers, 110 to 54, while 34 issues remained unchanged.
The peso, meanwhile, opened at P47.98 to $1 before trading between P47.95 and P48.00. Total volume transacted fell to P596.7 million from P644.5 million previously.