By Carmina Angelica Valeroso-Olano, Researcher

LOCAL shares slipped further on Friday to its lowest in 14 months as the novel coronavirus rapidly spreads prompting the World Health Organization to declare the outbreak as a global health emergency.

The benchmark Philippine Stock Exchange index (PSEi) plunged 2.59% or 191.89 points to close at 7,200.79 on Friday, while the broader all shares index fell 100.34 points or 2.28% to end at 4,292.21.

The PSEi was last seen at this level since the 7,083.34 close in Nov. 16, 2018.

“The sentiment for the trading session last week mainly revolved around the fears of the rapid spread of the 2019 Novel Coronavirus which caused concerns on its potential impact in the global supply chain, given that China is our largest trading partner,” said Charlene Ericka P. Reyes, officer-in-charge of trading and research at First Resources Management and Securities Inc., in an email.

“The downward pressure could remain in the medium-term, however we note that the timeline for the virus spread remains an uncertainty in the future,” she added.

Jeff Radley C. See, analyst at Mercantile Securities Corp. noted that as the PSEi went south, the benchmark index is trading at an “alarming” level.

“At times like this, investors should stay in cash. We still do not know how the virus will spread as the affected area and death toll keeps on growing,” he said in an email referring to this period of an outbreak.

In a statement on Thursday, the World Health Organization said the coronavirus outbreak had spread to at least 18 countries, with the number of deaths reaching 170, constituting for a “Public Health Emergency of International Concern.”

At the PSE, five out of six sectoral indices ended in red territory yesterday. Industrials slumped 370.09 points or 3.98% to 8,921.44; holding firms lost 159.88 points or 2.26% to 6,900.31; property slipped 79.22 points or 2.02% to 3,838.74; financials shed 61.7 points or 3.45% to 1,724.93; and services dropped 26.53 points or 1.76% to 1,475.16.

Meanwhile, mining and oil climbed 146.28 points or 1.94% to 7,663.26.

Value turnover stood at P8.30 billion with 2.89 billion issues switching hands, up from Thursday’s P5.449 billion worth of 562.84 million issues.

Stocks that declined outnumbered those that advanced, 168 against 49, while 33 names ended unchanged.

Net foreign selling grew to P1.70 billion from the P513.05 million seen on Thursday.

In the short-term, First Resources’ Ms. Reyes said: “[Although] the local market registered a new 52-week low…we think that the sharp decline is overplayed. We anticipate that a rebound…is possible supported by some bargain hunting…”

“…[A]s we remain our cautious stance, we are recommending to sell during strength. Immediate support is seen at the psychological level at 7,000,” she added.

For Mercantile’s Mr. See, “It is hard to distinguish the length of this bearish sentiment. As long as the virus is spreading, investors should stay very cautious.”

In terms of fundamentals, he said: “[I am] not optimistic as of the moment as investors focused on the issue regarding the epidemic. Selling pressure would slow down somewhere between 7000-7200 level.”

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