PHL becomes 1st country to shut financial markets

By Denise A. Valdez
Reporter

THE Philippines on Tuesday became the first country to shut all financial markets until further notice, amid the implementation of a lockdown in Luzon aimed at curbing the spread of the coronavirus disease 2019 (COVID-19).

The Philippine Stock Exchange, Inc. (PSE) is now asking the government to allow the stock market to reopen.

PSE President and Chief Executive Officer Ramon S. Monzon said a position paper has been submitted to the Inter-Agency Task Force (IATF) to allow the resumption of trading at the local bourse.

The IATF was scheduled to hold a meeting on Tuesday afternoon.

“I think it was just an oversight that the capital markets were not included in the exemptions… That’s why we are making a presentation to them…to convince them how important it is to keep the capital markets open,” he told Bloomberg Markets on Tuesday.

Currency and bond trading were also suspended on Tuesday, but National Treasurer Rosalia V. de Leon said the suspension will be lifted once the IATF exempts fixed-income traders from the home quarantine imposed in Luzon.

“Yes, (suspended) today until IATF gives exemption to fixed income, hopefully (Tuesday),” Ms. De Leon said in a mobile phone message yesterday.

President Rodrigo R. Duterte announced a Luzon-wide enhanced community quarantine Monday night — which suspends all public transport facilities and requires a “strict home quarantine” in all households, among others.

“I think it was the most considerate and humane thing to do given the circumstances (particularly since public transportation is not available),” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a mobile message.

Mr. Lisbona said the closure of the market may intensify selling by foreign investors. “We still have foreign funds who want to exit the market and who are unable to do so because the market is closed. When the market reopens, the more they will accelerate selling because they are no longer sure how long the market will stay open,” he said.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco shared the same sentiment: “Investor confidence may take a hit which in turn could lead to more foreign selling once the market reopens.

While the trading suspension may serve as a “breather” after the recent bloodbath, Mr. Tantiangco said investors are now “forced to hold their positions for an uncertain period of time, denying the opportunity for those who want to sell stocks for cash to be utilized in other financial markets.”

PNB Securities’ Mr. Lisbona said the PSE is a good psychological barometer on the country’s economic condition, hence the value of having active trading during a crisis.

“If the market is trending up, it creates optimism that oftentimes translates into increased spending which has a positive and real effect on the economy,” he said.

As the market is on a decline, Mr. Lisbona said it is now dampening sentiment and wiping out billions in value. “This is why all markets are declining… Investors are not sure if the markets will stay open, hence they will liquidate their positions at any price.”

Meanwhile, the Bankers Association of the Philippines (BAP) said trading, clearing and settlement of foreign exchange and fixed-income transactions are also suspended until further notice. This as the services arm for trading (Philippine Dealing & Exchange Corp., PDEx), securities (Philippine Depository & Trust Corp., PDTC) and payment and transfer (Philippine Securities Settlement Corp., PSSC) were not exempted from the home quarantine.

“Due to the non-inclusion of PSSC, PDEx and PDTC in the lists of exemptions from strict home quarantine and the PSSC unable to operate the settlement functions remotely, the trading, clearing and settlement of FX and FI transactions are suspended on March 17, 2020 until further notice,” the BAP notice read.

The BTr also moved yesterday’s 7-year T-bond auction to next week, March 24, as well as postponed the first quarterly draw of Premyo bonds to April 27 from the initial schedule of March 18, Wednesday, following the lockdown announcement.

Meanwhile, Bangko Sentral ng Pilipinas (BSP) Payments and Settlements office said its Philippine Payment and Settlement System (PhilPaSS) will operate from 9 a.m. to 3 p.m.

This will include retail transactions such as transactions via “automated teller machines (ATM), automated clearing houses (PESONet and InstaPay), checks and urgent fund transfers requested by banks for corporates, as well as trading with the BSP Financial Market Operations Sub Sector, if any.” — with a report from Beatrice M. Laforga