The stock market and the peso tumbled anew on Wednesday, tracking regional losses traced to rising risk aversion among investors.
The benchmark Philippine Stock Exchange Index (PSEi) dropped by 1.53 percent or 97.44 points to close at 6,259.61, while the wider All Shares retreated by 1.36 percent or 49.64 points to finish at 3,605.62.
The peso hit a six-year low against the US dollar, which strengthened against emerging currencies, to close at P47.89:$1, down 22 centavos from Tuesday.
“This is a contagion … We just mimic the performance of our peers in the Asian region,” said April Lynn Tan, research head at COL Financial Group Inc.
Tan said that PSEi would continue to experience wild swings given China’s weakening economy and plunging oil prices.
Alexander Tiu, analyst at AB Capital Securities Inc., said the drop in oil prices was a clear indication that China’s economy was slowing down.
“Although there is indeed an oversupply of petroleum products, it is likewise an indication of a substantial decrease on its demand,” Tiu said.
“China is a big economy requiring a lot of oil and this decrease in demand consequentially comes from China, and in turn the decrease in demand from China is reflective of why oil prices got weaker,” he added.
“Oil at its extremely low price has a wide-ranging implication,” Tiu said, noting that oil firms worldwide were belt-tightening, which could in turn affect overseas Filipino workers, particularly those working in the oil-rich Middle East.
With regard to the peso, meanwhile, Banco de Oro Unibank chief market strategist Jonathan Ravelas said: “The dollar continues to strengthen against major currencies causing USD-PHP weakness.”
“Next resistance at P48,” Ravelas said, adding that the greenback’s strength can be traced to risk aversion trades.
The peso opened at P47.69 to $1 at the PDS before trading between P47.68 and P47.89. Total volume transacted fell to P608.7 million from P827.6 million previously
At the stock exchange, all subindices were in the red except for services, which eked out at 0.57 percent gain. Property was the most hit with a 3.93 percent fall.
Value turnover reached P5.329 billion, with losers edging winners 114 to 48, while 49 issues remained unchanged.