By Arra B. Francia, Reporter
LOCAL EQUITIES plunged with much of the world on Monday as investors shunned risk in the face of mounting signs of a global growth slowdown ahead.
The Philippine Stock Exchange index (PSEi) fell 1.87% or 150.40 points to finish 7,863.02, failing to hold the 8,000 line it breached last Friday. The broader all-shares index likewise retreated 1.43% or 70.44 points to end 4,842.87.
“It was more of the offshore concerns that caused the local market’s retreat today. First, we have the inverted yield curve in the US which is usually associated with an upcoming recession,” Philstocks Financial, Inc. Research Associate Japhet Louis O. Tantiangco said in a text message.
He added that the contraction of the Eurozone Manufacturing Purchasing Managers’ Index also weighed on sentiment, as manufacturing activity was reported to fall to 52.5 in March, its lowest level in almost two years.
“All of these together with the dovish stance of the monetary policies of the major economies including the US, the European Union, and China are backing the notion of a slowdown in the global economy,” he explained.
Regina Capital Development Corp. Head of Sales Luis A. Limlingan also noted the inversion of the US yield curve, which typically signals a recession ahead.
“The benchmark 10-year rate fell below the three-month yield, causing a yield-curve inversion, which often signals a recession is on the horizon,” Mr. Limlingan said in a mobile phone message.
The PSEi followed the huge pullback overseas.
On Friday, the Dow Jones Industrial Average spiraled down 1.77% or 460.19 points to 25,502.32; the S&P 500 index dropped 1.9% or 54.17 points to 2,800.71; while the Nasdaq Composite index plummeted 2.5% or 196.29 points to 7,642.67.
Asian markets were no better off on Monday, as Japan’s Nikkei 225, Hong Kong’s Hang Seng Index, Shanghai Composite index, South Korea’s Kospi and India’s S&P BSE Sensex Index fell 3.01%, 2.03%, 1.97%, 1.92% and 1.11%, respectively. “To add, our regional peers are also in red meaning investors have fled towards safer assets,” Philstocks Financial’s Mr. Tantiangco noted.
All six sectoral indices at home declined: holding firms by 2.73% or 217.33 points to 7,726.72, mining and oil by 2.37% or 198.38 points to 8,141.23, financials by 1.82% or 32.58 points to 1,756.89, property by 1.33% or 54.90 points to 4,056.60, industrials by 0.82% or 96.76 points to 11,640.62 and services by 0.76% or 12.25 points to 1,596.46.
Investors abroad remained predominantly bullish for the third straight trading day, although net buying was more than halved to P666.90 million from Friday’s P1.45 billion. Some 708.80 million issues worth P5.39 billion changed hands, compared to Friday’s 1.36 billion issues worth P7.61 billion. Stocks that declined were almost three times those that gained, 142 to 47, while 41 others ended flat.

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