Philippine stocks suffered a 24% loss, its biggest intraday loss in 33 years, upon resuming trading after an unusual two-day shutdown prompted by coronavirus spread, reports Bloomberg.
The Philippine Stock Exchange Index plunged record 13.3% drop on Thursday, leading its valuation to the steepest fall in 11 years.
Shares dropped to 4,623.42, a 13.34 % decline from its previous session, it went down to as much as 24 % before regaining slightly.
The decline came before the central bank’s decision to an assertive cut to its interest rate by 50-basis points along with anxieties that a 27.1 billion-peso ($528 million) package be enough to curb the impact of coronavirus, Bloomberg reported.
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Manny Cruz, strategist at Papa Securities Corp. told Bloomberg that the two-day closure shut the chance for investors who were headed for the exit.
“The money that wanted to go out got accumulated and investors got scared and lost confidence they can go out anytime they want so they took this resumption as an opportunity to rush to safety,” he explained.
According to the country’s central bank governor Benjamin Diokno, the Luzon-wide enhanced community quarantine will have a ‘large and protracted’ blow to the economy if the stringent measure fails.
The month-long quarantine measure has saw many stores and business wind down except for critical industries such as healthcare, banks, and supermarkets.
All trading activities are conducted remotely when the trading resumed, according to Philippine Securities and Exchange Commission. Foreign investors have sold $480.5 million net of local stocks this year, the fastest withdrawals since Bloomberg began tracking the data in 1999.
The Bloomberg report added that a U.S.-listed exchange-traded fund that tracks Philippine shares sank by a record 19% on Monday after the bourse announced it was closing, before rebounding 8.1% on Tuesday. It plunged by 10.1% on Wednesday in New York.
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Jun Calaycay, a strategist at PhilStocks Financial, said the country’s benchmark index could dip to 4,700, a 12% decline from Monday’s close, should the 5,000 to 5,100 support level fail to hold.
A prolonged pandemic could send the gauge down 56%, matching its slump from peak to trough during the 2008 global financial crisis, he bared. Since a record high in January 2018, the gauge has already tanked 41%.
“It’s hard to say whether we have hit a bottom for there are still many headwinds ahead,” Calaycay said. While the inflow from the government’s financial institutions will provide some support, “what is certain is we are in a bear territory that could last until the virus is contained,” he added.
