PSEi sinks as sudden MECQ shift confirms investor worries

04-Aug-2020 Intellasia | PhilStar | 6:02 AM Print This Post

Local shares tanked on the first trading day of August with investor sentiment depressed by President Rodrigo Duterte’s abrupt decision to put the capital and nearby areas back on stricter lockdown for 15 days amid a resurgence in coronavirus cases.

Lingering worries of a return to a tighter lockdown were realised on Sunday after Duterte’s late night announcement, and on Monday, investors quickly pulled out of one of the world’s worst-performing bourses. The Philippine Stock Exchange index (PSEi) crashed 3.59 percent to close at 5,715.92 in the first day of trading week.

“Investors reacted negatively as the stricter quarantine measures hamper economic recovery. Some businesses are, once again, temporarily shut down or limit operations in accordance to the implemented guidelines,” Claire Alviar, research associate at Philstocks Financial Inc., said in a text message.

Responding to calls from the health sector, President Rodrigo Duterte decided to place Metro Manila, Cavite, Laguna, Risal and Bulacan under a more stringent modified enhanced community quarantine that will see 100 percent of the population in covered areas indoors, and quarantine passes required to go around.

Employers, while supportive of the lockdown to contain a latest uptick in coronavirus cases, have also grown wary of disruptions and costs by such tough measures especially since the economic recovery has really not gone full swing yet since the reopening last June 1.

Over at PSE, it was a sea of red across all sectoral sub-indices on Monday, led by the property counter, which plummeted 5.12%. This was followed by financials that dropped 3.74%, holding firms (-3.46%), services (-2.19%), mining and oil (-1.93%) and industrial (-1.64%).

Shares in blue chips SM Investments Corp. and Ayala Land Inc., both major shopping mall operators, sank 3.37 percent and 6%, respectively, while fast-food giant Jollibee Foods Corp. sagged 5.93%, as dine-in services prepare to get suspended under MECQ.

“Most of them have not yet recovered from the closure of its stores during the strict lockdowns, and another shut down of operation would make it harder for businesses to recover from the pandemic. Along with it is the weak consumption demand,” she added. All eyes on Q2 GDP

Foreigners sold P1.64 billion more shares than they bought, bearing down on the bleeding market more as it followed a general negative sentiment in the region, albeit dropping faster than the rest.

Hong Kong dropped 0.6 percent as the city continues to see more than 100 infections a day, forcing authorities to put ever-tighter measures in place.

Singapore, Mumbai and Taipei were each off more than 1%. There were also losses in Sydney, Bangkok and Wellington.

Markets in London, Paris and Frankfurt were all in the red in early trade.

Over in Manila, Alviar said stocks are bound to get lower in the coming days as economic data likely showing the Philippines entered recession in the second quarter is released on Thursday.

“For inflation rate, we’re not seeing this to significantly impact the market as it was already priced-in that it would be benign this year,” she added. Inflation data for July will be released Wednesday.


Category: Philippines

Print This Post