Philippines bourse bleeds, sinks to bear market territory

MANILA, Philippines — It was a bloodbath at the trading floor on Monday as the local bourse tracked a bearish regional sentiment that pushed it down to its weakest level in more than four years, collapsing over threats of a coronavirus spread and an oil retreat adding to the panic.

A day after an eventful weekend, the Philippine Stock Exchange index (PSEi) sank 457.77 points or 6.76% to end trading passing bear market territory at 6,312.61. It was the index's worst close since Jan. 26, 2016 when it ended trading at 6,311.60, and represented a drop of more than 20%.

Highlighting the extent of the decline, it was also PSEi's biggest one-day drop since Oct. 27, 2008 when the global financial crisis was just beginning to take its toll on the global economy.

All sub-indices ended in red, led by a massive 8.56% drop for financials, followed by services (-6.7%), industrial (-6.36%) and holding firms (-6.2%).

"Philippines shares had one of the worst finishes in history as the oil rout as OPEC and Russia failed to reach a consensus on the cut," said Luis Limlingan, marketing director at Regina Capital.

Investors are fearing an oil supply glut to hit the market after members of the Organization of Petroleum Exporting Countries did not only fail to reach decision to reduce supply with Russia, but also trigger a price war as Saudi Arabia steps on the accelerator to produce more oil.

The failure of the Vienna meeting sent oil prices tumbling more than 30% as traders weighed the impact of potential additional supply over lackluster demand from key markets like China where the Coronavirus Disease-19 (COVID-19) is dealing a blow on the economy.

PSEi tracked down a bearish sentiment in the region, with the Nikkei 225 losing more than five percent. Those in Hong Kong dived 3.7%, while in Sydney, equity markets shed 7.3%.

Markets in Mumbai, Singapore, Seoul and Jakarta all fell more than four percent, while those in Shanghai lost three percent, and Bangkok gave up 6.8%. Saudi equities tanked more than nine percent with oil titan Saudi Aramco losing a tenth.

"Something like this could have more global repercussions that a trade war between China and the US because oil touches so many things in the world economy," said Rohitesh Dhawan, director energy, climate and resources at Eurasia Group in London.

The still-uncontrolled spread of COVID-19 also added to investor worries. In the Philippines, the Health department reported four new cases last Sunday, bringing the total number of infections to 10 with one death.

"Local markets continue to tumble amid COVID-19 scare as local investor sentiment continue to wane as global markets fall," Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said in a text message.

"Next major support is 6,000 levels," he said, adding that with valuations now "quite cheap," investors may take the opportunity to buy in "despite the fear."

But over-all other analysts said the worst is yet to come. "You just don't know which way things are going to go, it makes it very hard to price anything right now," said Sarah Hunter, chief economist for BIS Oxford Economics, on Bloomberg TV.

"We're seeing that in the market with the wild oscillations that are coming through," she added.