SHARE prices plunged on Monday in one of the biggest single-day losses of the Philippine Stock Exchange (PSE).
The PSE also experienced a trading halt due to a technical glitch, as the local market became one of the biggest losers among its Asian peers.
The benchmark PSE index (PSEi) shed 487.97 points, or 6.7 percent, to close at 6,791.01, on huge sell-offs.
Trading at the PSE was also halted by less than hour during the afternoon trading on a technical glitch relating to a delay in the front-end trading terminal of the PSE.
The PSE said trading was halted at 2:05 p.m. and resumed at about 2:50 p.m. Monday was the second time in a week that the PSE halted trading due to a technical glitch.
PSE President Hans Sicat said the fall was contributed by the previous week’s volatile market conditions, including oil prices reaching “interesting lows,” China’s devaluing the yuan and the steep fall in Wall Street on Friday.
“I would argue that what ‘s happened in Philippines today is very much consistent in pressures felt by all emerging markets. [This is happening] not only in equities classes but all classes of assets,” Sicat said in a briefing with reporters.
Philippine markets were spared on Friday when other markets overseas experienced huge drops as it was a public holiday.
Monday’s drop wiped out all of the market’s gains for the entire year, including the 8,127.4 points, an all-time high. The PSEi is now 6.1 percent lower than last year’s closing prices.
The drop also wiped out some P764 billion of the value of the market, which now stood at P13.27 trillion from Thursday’s P14.03 trillion.
It was also the 11th steepest drop in terms of percentage in a day for the PSE, but in terms of nominal points, this was the biggest.
In 2013 the market dropped 6.75 percent, which followed the announcement of the US Federal Reserve on the halt of the quantitative easing policy, and then a 6.86-percent fall in August 1990. The biggest drop was the 12.27 percent experienced on October 27, 2008, as the Philippines was hit by a contagion of the global financial crisis.
Sicat, however, said that what happened in the market was not akin to recent global financial crisis, which also hit emerging economies, that was precipitated by global banks’ downward spiral as a result of soured assets.
“This time, the banks are not the cause. In our region, China has been the catalyst of the nervousness…. We hope that [the drop] is not a Philippines-specific issue,” Sicat said.
Trader Justino Calaycay Jr. said the Philippines may have entered the bear market, a trading jargon that mean prices are falling and widespread pessimism affects the prices.
“Are we in a bear market? Based on the major characteristics of one, the answer appears to be ‘yes.’ What broke the camel’s back, in a manner of speaking, is today’s slump—specifically the breach of the 6,846.53 line,” he said.
On the technical glitch, Sicat said its Nasdaq system is not the cause of the halt.
“The trading engine remains okay. The trading halt has nothing to do with the performance of the engine perse,” he said.
Image credits: Nonie Reyes