Stocks tumble as outlook on Philippine credit downgraded

MANILA, Philippines — Stocks plummeted yesterday after a global debt watcher downgraded its credit rating outlook for the Philippines, citing increasing risks to the credit profile from the impact of the pandemic and its aftermath on policy-making.

The benchmark Philippine Stock Exchange index (PSEi) closed 118.74 points or 1.72 percent lower to a near five-week low of 6,795.13 while the broader All Shares index shed 54.26 points or 1.27 percent to end at 4,215.76.

“The local market closed below the 6,800-level after Fitch downgraded the credit rating outlook of the country from stable to negative,” AB Capital Securities said in a commentary.

Fitch Ratings, one of the Big 3 global credit raters, revised its outlook on the Philippines to negative in a major blow to the country’s efforts to improve its credit profile.

“The revision of the Philippines’ outlook to negative reflects increasing risks to the credit profile from the impact of the pandemic and its aftermath on policy-making, as well as on economic and fiscal out-turns,” the credit rater said in a statement.

Market participation was weak with a net value turnover of P5.78 billion. Decliners outnumbered advancers, 125 to 66, while 51 issues were unchanged.

Net foreign selling persisted for the seventh straight session with P1 billion. However, excluding block sales, net foreign selling was at P163 million.

Claire Alviar, research analyst at PhilStocks Financial Inc., said the move of Fitch Ratings negatively affected sentiment.

“This provides negative sentiment as the Philippines’ credit rating could be downgraded as well. A lower credit rating is expected to adversely affect our borrowing cost which is not welcome amid challenging times and a struggling economy,” she said.

In a report, research portal Trading Economics said sentiment was also dragged down by the Department of Health’s remarks that the entry of the more contagious COVID-19 Delta variant in the Philippines is inevitable, further raising concerns on the prospects of a full economic reopening.