Stocks in free fall, erasing P1.16 trillion in market value

THE Philippine Stock Exchange index (PSEi) plunged by a record 13.34% on Thursday, erasing P1.16 trillion in market value.

Investors rushed to the exit once trading opened on Thursday morning, after a two-day closure due to the Luzon-wide lockdown meant to contain the coronavirus disease 2019 (COVID-19) outbreak.

The circuit breaker was triggered shortly after stocks slumped 12.4% immediately after the market opened. Since it is only triggered once a day, the PSEi went into free fall, plummeting as much as 24.29%.

The main index closed 711.95 points or 13.34% lower to 4,623.42 — its largest-ever one-day drop in both points and percentage. This was also the lowest close since Jan. 26, 2012 when it hit 4,611.68.

PSE Chief Operating Officer Roel A. Refran said the bourse operator is looking at revising its circuit breaker rules in an attempt to curb market volatility. He said in a text message they are looking at a multi-level circuit breaker, similar to other markets.

“The numbers show us the intensity of the pessimism in the volatile market today,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

He noted investor sentiment across the world is at a low amid fears of a recession in advanced economies, while in the Philippines, investors are concerned over the economic disruptions due to the Luzon-wide lockdown.

During Thursday’s shortened trading session, foreign net selling surged to P2.40 billion from P741.72 million on Monday.

Trading volume spiked to 1.25 billion issues valued at P9.42 billion from 618.19 million issues worth P6.44 billion in the last session.

AAA Southeast Equities, Inc. Research Head Christopher John Mangun said investors rushed to sell after two days of no trading.

“This sell-off will continue until we see some improvement on the containment of the COVID-19 virus on our shores,” Mr. Mangun said in an e-mail.

Philstocks’ Mr. Tantiangco advised investors to “sell positions for now” and “wait for the local bourse to consolidate first or show a sustainable recovery before taking positions.”

For PNB Securities, Inc. President Manuel Antonio G. Lisbona, investors must remain on close watch for opportunities to benefit from the situation.

“It is hard to be optimistic especially after seeing declines of this magnitude day after day but in hindsight, it’s events like these are what provide golden opportunities for investors with the liquidity, fortitude and patience,” he said in a text message yesterday. — Denise A. Valdez