By JAMES A. LOYOLA
The local stock market suffered its third steep drop in four trading days, coming close to bear market territory, in line with a global equity rout due to fears over the impact of the worsening coronavirus disease 2019 (COVID-19) pandemic.
The Philippine Stock Exchange index (PSEi) fell 179.93 points, or 2.58 percent, to close at 6,787.91 as share prices fell across the board, pushing it closer to “bear” territory. Volume surged to 1.1 billion shares worth ₱11.39 billion as losers swamped gainers 160 to 50 with 36 unchanged.
“Local and international markets did not find any relief on pandemic concerns yet,” said Regina Capital Development Corporation Managing Director Luis Limlingan.
He noted that: “For the first time, new cases offshore had surpassed that from China. Head of WHO’s statement that this is looking like a global pandemic added to the selling pressure.”
Philstocks Financial Vice President for Research Justino Calaycay Jr. noted that, “Year-to-date, the PSEi has given up nearly 1,000 points or -12.8 percent, past the commonplace correction line.”
The 7.4 percent plunge this week, its worst since September 2011, has taken the market down 18 percent from a high reached in July.
The slide has wiped out more than $30 billion of market value since the start of 2020, with overseas funds pulling out a net $263 million.
The sell-off has taken the index’s valuation down to about 13 times estimated earnings for the next year, the lowest since January 2012, data compiled by Bloomberg show.
Calaycay pointed out that, “The COVID-19 is more than just a scare – it is real, and so is its impact on the broad economy.”
“For a small market like us, the theme is to track other markets.” said Unicapital Securities Inc. Head of Research Justin Lawrence Tembrevilla, noting that: “The psychological support is at 6,800 – if that breaks, we could fall into a bear market.”
He added that: “I’d like to be optimistic that as more companies report good earnings, this could soften the impact of the sell-off. This is a knee-jerk reaction to the coronavirus proliferation. I’d rely on corporate and economic data.”
Overnight, US Stocks fell from the start and never looked back, chalking up the worse single day loss since 2011 as investors worried the coronavirus may be spreading in the US.