PHILIPPINE stocks investors, crushed by the steepest plunge on record, should brace for more pain, according to the country’s seasoned market watchers.

The Philippine Stock Exchange Index pared gains of as much as 6.8% to end 3.4% higher at the 1:00 p.m. close in Manila. Any rally from Thursday’s record 13% loss after a controversial two-day trading halt could just be a technical bounce and will likely be short lived, analysts say. Until the coronavirus outbreak subsides, the brutal sell-off that it triggered won’t stop even with valuations at the lowest in 11 years, according to Philequity Fund.

“I haven’t seen anything like this in my almost 50 years in the market,” says Wilson Sy, founder of the Philequity Fund, one of the nation’s oldest mutual funds. “Fundamentals are thrown out. Technicals are thrown out. The coronavirus has taken hold. Until this tapers off, this kind volatility will hit us.”

Philippine stocks plunge by most ever after resuming from two-day halt

The virus-fueled global equity sell-off pushed the Philippine stock index down through Thursday by almost 41% since the end of 2019, its worst start to a year, based on data going back to 1987. Its valuation, once among Asia’s highest, has tumbled to about 9 times earnings forecast for the next year, the cheapest in the region after benchmark indexes in Hong Kong, South Korea and Sri Lanka.

Philippine equities will keep retreating until a bottom is seen in overseas markets, particularly the U.S., according to April Lynn Lee-Tan, head of research at COL Financial Group Inc., whose more than 20 years of experience has encompassed the 1997-1998 Asian financial crisis. An escalation in infections and fears of a global recession will likely trigger further losses, exacerbated by programmed trading and the selling of positions that need to be undone as certain prices are hit, she said.

“Stocks are really cheaper now no matter how you look at it,” Tan said. “Now is exactly the time to be greedy when others are fearful. But if you come in, do it slowly and make sure you can hold on to those positions until things normalize.”

A U.S.-listed exchange-traded fund that tracks Philippine shares rose 2.7% on Thursday. The ETF plunged by a record 19% on Monday after the bourse announced it was shutting.

Foreigners are selling Philippine stocks at the fastest pace since 1999, when Bloomberg began tracking the data. They have pulled more than $527 million so far this year. The exodus, which has wiped out more than $105 billion in market value since December through Thursday, isn’t seen ending any time soon as investors continue to flee to havens.

Philippine stocks are trading at their cheapest levels since 2009

“Investors are having second thoughts about coming in because it seems fundamentals are taking a hit from the virus,” Tan said. “People aren’t thinking straight at this point, and the reason for selling is not really fundamentally driven — but fear.”

With no signs that the viral outbreak has peaked, the Philippine stock index may exceed its 56% peak-to-trough slump during the 2008 global financial crisis, according to Manny Cruz, a strategist at Papa Securities Corp. A dip below 4,000 — the gauge closed at 4,623.42 Thursday — is “within the realms of possibility given the fear out there,” he said.

“The bearish sentiment will escalate once infection cases ramp up in the coming days as countries intensify testing,” said Cruz, a two-decade veteran in the local stock market. “Don’t go against the herd. Stay aside, keep your cash until the panic has peaked.”

The market’s “uncharted territory” is an opportunity for two- to three-year investment horizons, said Philequity’s Sy, citing gains that followed previous crises.

“We are slowly nibbling but you must have a long-term view because it’s still a scary environment,” Sy said. “Go for the big caps because these have the balance sheet, liquidity and are first to go up when this blows over.

Since the month-long lockdown of the main Luzon island started, the bourse shortened stock trading hours to 1 p.m. from the previous 3:30 p.m. close. — Bloomberg