MANILA – Philippine share prices plunged to their weakest levels in more than 19 months on Thursday, confirming that the market had entered bear territory.
The benchmark PSEi lost 163.47 points or 2.25 percent at 7098.15, the weakest in over 19 months since the index closed at 7,119.04 on Nov. 9, 2016. The broader All Shares dropped 91.01 points or 2.04 percent to 4,369.21 at the closing bell.
Thursday’s losses reflect a 21.64 percent decline from this year’s peak of 9,058.62 on Jan. 29, 2018, confirming that the market has entered bear territory.
In a bear market, securities prices have fallen by 10 percent or more due to “self-sustaining” downward spiral – a result of “widespread pessimism,” according to Investopedia.
“We still see a lot of foreign selling today. So what we can say is that the market is continuing to drop because we haven’t seen foreigners giving their selling a rest,” Carlo Capacillo, senior dealer at AP Securities Inc., said.
“There’s flight of capital from emerging markets back to deloped capital markets. The whole region, whole Southeast Asian region, is experiencing a sell-off and we’re now approaching oversold conditions,” he said.
Foreign funds bought P3.145 billion worth of shares and sold P5.411 billion for a net selling position of P2.265 billion.
On the impact of the recent rate increase by the Bangko Sentral ng Pilipinas (BSP), Capacillo said it did not really have a significant impact on the stock market considering that the peso did not firm up as much as expected.
“The rate hike didn’t do much … The peso really did not strengthen,” he said.
The market expected the peso to appreciate after the policy tightening, said Aniceto Pangan, equities trader at Diversified Securities Inc.
“Even with the interest rate hike of 25 basis points, we have not seen any substantial appreciation of the peso yet,” he said.
The peso traded on a firm note against the dollar, ranging from P53.35 to P53.50 per dollar.
“I would say (the policy tightening) is not enough to arrest the depreciation of the peso. It’s not substantial enough,” Pangan said. (GMA News)
