PHILIPPINE stocks fell by the most in nine years as Tuesday’s plunge in the Chinese stock market triggered a global equities selloff. Philippine Long Distance Telephone Co. and Bank of the Philippine Islands slumped.
“This is really a spillover effect of what happened in China yesterday,” said Paul Garcia, who oversees $1.4 billion of assets as chief investment officer at ING Investment Management Philippines in Manila.
While the local share prices plunged 7.92 percent at the end of Wednesday’s trading in the stock market, analysts said, meanwhile, the Philippine market is strong enough to withstand the setback primarily caused by external issues.
“We have been waiting for that correction,” according to an analyst from RCBC Securities. “I think there was an overreaction on what happened in China and the comment made by former Federal Reserve chairman Alan Greenspan that the US economy might slip into a recession by the end of 2007.” The analyst said the local market remains strong because the fundamentals are solid. Full story of analysts’ take on the local markets on page B1.
The Philippine Stock Exchange Composite Index on Wednesday lost 263.84 points, or 7.9 percent, to close at 3067.45 at noon in Manila, its biggest one-day decline since January 9, 1998. The benchmark dropped for the first month in six, shedding 5.3 percent, which was the biggest monthly decline since March 2005.
It slumped as much as 10.2 percent earlier in the day. In the broader market, losers outnumbered gainers 159 to four, while six were unchanged in the broader market.
Malacañang on Wednesday expressed confidence that the country’s strong economic fundamentals would help the Philippine stock market withstand Wall Street’s fall.
Executive Secretary Eduardo Ermita said the Philippine stock market is “expected to recover in the next few days.”
“Considering that our country’s economic fundamentals are well in place and our economic figures are okay, what’s happening in the stock exchange trading in China and the US will not have too much negative impact on the stock exchange trading in the Philippines. It is expected to recover in the next few days,” he said.
In an interview with reporters, President Arroyo said that what is important is that even if developments in Wall Street would affect the Philippines, the Philippine economy would “continue to grow” because many companies are not publicly listed.
She noted that many of the country’s manufacturers are not publicly listed and do not rely on the stock market for capital.
At the close Wednesday, Philippine shares had fallen the furthest of any benchmark in the Asian region, because its market shuts at noon, which limited losses Tuesday. China’s key index plunged 9.2 percent Tuesday, the most in 10 years, as the government took measures to crack down on speculation that had driven shares to records.
“Those funds that were not able to sell yesterday because we only have a half-day of trading are giving their orders to sell today,” Garcia said.
Two weeks ago, the President urged Philippine firms to develop “good stock offerings” in view of expected increased investments after the California Public Employees Retirement System (CalPERS) gave the country good marks as an investment site. –Mia Gonzalez and Bloomberg, BusinessMirror