STOCK, bond and currency trading in the Philippines have been halted, making the Philippines the first country to shut financial markets amid the escalating coronavirus pandemic.
The closures take effect Tuesday, March 17, 2020, until further notice, statements from the Philippine Stock Exchange (PSE) and the Bankers Association of the Philippines said. The PSE also announced there will be no clearing and settlement at the Securities Clearing Corp. of the Philippines until further notice.
Philippine equities have dived more than 30 percent this year, among the biggest declines in Asia, as global stocks plunged on fears of a global recession.
Shutting markets during times of crisis rarely happens.
America’s stock market closed for almost a week after the 9/11 terrorist attacks in 2001, while Hong Kong halted trading in the wake of the Black Monday crash in 1987.
Marco Nino Velasco, equities investment manager at Unicapital Securities, said the suspension gives the market time to rest amid the uncertainty.
“The indefinite suspension prevented the PSE from dropping further. I guess the same can be said for bonds. Financial markets have really been rocked recently, and I still keep the same stance that this is just the start. Things will get a lot uglier soon if the coronavirus continues to spread,” the analyst told SunStar Cebu.
If trading resumes soon and things remain as is, Velasco sees a big drop.
“It will catch up with the rest. That would be very, very damaging as it would result in very big losses. Mutual funds, unit investment trust funds and insurance companies will take very big hits. Pooled funds are now down by more than 20 percent,” he pointed out.
Economic activity is seen to further go down as community quarantine measures push people to their homes and limit business operations.
“This will drag down profits. Lower profits will bring down the value of shares and bonds,” Velasco further said.
“Best thing that people should have done was stay liquid. There is too much uncertainty in the market, and with the way things go, it is not worth the risk,” he added.
The Philippines is likely to see lower gross domestic product growth in 2020 as business activity has been badly hit by the public health crisis.
Inflation rate may also pick up this year.