Tuesday, October 28, 2008
Peso sinks to lowest level against the dollar in nearly 2 years
MANILA - Shares closed down 12.3 percent yesterday in a broad sell-off that forced a 15-minute trading halt as regional markets were hit by fears of a global recession, dealers said.
The peso, meanwhile, sank to its lowest level against the dollar in nearly two years yesterday, forcing the central bank to intervene.
The composite index lost 239.66 points to 1,713.83 after falling through the 10 percent level in the late morning, which triggered an automatic trading halt.
The fall was spurred by worries over the prospects of the US and Chinese economies. The fall is the biggest in one day since Feb. 28, 2007, when the market lost 263.84-point, or 7.9 percent.
Lowest
The index is now at its lowest level since Sept. 20, 2004, when the main barometer of the Philippine stock market’s performance ended at 1,702.21 points.
Turnover was relatively thin at 1.1 billion shares worth P1.6 billion, with 123 issues in retreat, 13 unchanged and just five managing to survive the bloodbath.
The peso traded at an average of P49.312 to the dollar in the morning after the central bank intervened, flooding the market with an estimated $100 million, according to dealers, after the local unit touched a 22-month low.
A sharp fall on Wall Street Friday sparked the early selling which accelerated after Banco de Oro, the country’s second largest bank, reported a P1.3 billion loss in its July to September quarter on exposure to collapsed US investment bank Lehman Brothers.
“The market isn’t acting rationally, and I suspect it is partly because of continuing fund redemption and margin calls,” Joey Roxas of Eagle Equities told Dow Jones Newswires.
Banco de Oro plunged 24 percent to P22.50. Top-traded Philippine Long Distance Telephone fell 14.2 percent to P1,850. Ayala Corp. dropped 11.9 percent to P200, its Ayala Land arm lost 8.6 percent to P5.30, and unit Bank of the Philippine Islands ended 10 percent down to P36.
SM Prime Holdings gave up 9.7 percent to P6.50. San Miguel A shed 2.3 percent to P42, while its B shares were 4.5 percent down to P42.
Elsewhere in the world, stock markets resumed their slide yesterday, with Japan’s Nikkei stock index falling to a 26-year low, as government rescue measures failed to ease fears of a prolonged global recession.
Panic
Investors seemed loath to wade back into securities following last week’s sell-off, worried a stream of economic data from the US this week could bring more bearish news about the world’s largest economy and trigger another round of selling. Selling by investment managers, bracing for another wave of redemptions, also fed the declines, analysts said.
“We’re seeing a lot of panic selling,” said Peter Lai, investment manager at DBS Vickers in Hong Kong. “People are just liquidating ... Nobody can predict where the bottom is.”
Tokyo’s Nikkei 225 index, after trading higher in the morning, closed down 6.4 percent to 7,162.90 - the lowest since October 1982. Hong Kong’s Hang Seng Index tumbled 12.7 percent to 11,015.84, its lowest close in more than four years.
European markets followed Asia lower, with benchmarks in Britain, Germany and France trading down more than 4 percent or more in early trading.
On Wall Street Friday, the Dow Jones industrial average fell 312.30, or 3.59 percent, to 8,378.95. Early Monday, stock index futures were down, signaled a lower open. Dow futures were down 268 points, or 3.2 percent, at 7,994. S&P futures were down about 4 percent.
The sharp declines yesterday came amid another round of government measures to boost markets. In South Korea, the central bank slashed its key interest rate Monday by three-quarters of a percentage point - its biggest cut ever - to prevent Asia’s fourth-largest economy from lurching into recession.
Measures
Australian and Hong Kong central bankers injected funds into their markets to ensure liquidity. Japan’s prime minister urged officials to draw up measures to calm volatile stock markets and to fend off further fallout from the crisis.
In Europe, the International Monetary Fund said yesterday it had reached a tentative agreement to provide Ukraine $16.5 billion in loans and announced that emergency assistance for Hungary had cleared a key hurdle.
Only South Korea’s market managed to eke out gains, perhaps in part because of the big rate cut there. The benchmark Kospi ended 0.8 percent higher at 946.45.
In mainland China, the benchmark index slumped to its lowest level in more than two years as investors reacted to dismal earnings reports. The Shanghai Composite Index lost 6.3 percent, or 116.27 points, to 1,723.35. It is now down about 72 percent from its peak about a year ago.
“The panic spread much faster than we expected. It’s as if everyone wants to be the fastest runner, with the best escape,” said Feng Yuming, an analyst for Oriental Securities in Shanghai. (AP/AFP)
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