Philippine stocks record biggest loss since 2008

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Boom! An onslaught in the Philippine stock market greeted stock traders and investors yesterday, August 22, after returning from a three-day break due to the heavy rains and a public holiday.

The Philippine Stock Exchange index (PSEi) was heavily battered in yesterday’s trading, shedding 5.96% to close at 6,136.73 — its worst performance since July 13, when the PSEi suffered its biggest 1-day loss of 6.75% since the Lehman Brothers collapse in 2008.

The index actually hit a low of 6.93% in intra-day trading before recovering prior to the day’s close.

All sectors were pounded heavily, led by the Property sector which saw its value drop 7.94% in one day. The Holding Firms sector plummeted 7.62% while the Financials sector plunged 5.61%.

Turnover was 2.1 billion stocks worth a total of P12.25 billion.

Top 10 Most Actively Traded Stocks

Most actively traded were the following stocks:

  1. SM Investments Corp. (SM): closed at P725.00,  down 8.92%
  2. PLDT (TEL): closed at P2,946.00, down 3.98%
  3. Alliance Global (AGI): closed at P25.10, down 9.39%
  4. Ayala Land Inc. (ALI): closed at P27.90, down 8.22%
  5. Ayala Corp. (AC): closed at P558.00, down 6.84%
  6. Metrobank (MBT): closed at P106.50, down 3.27%
  7. SM Prime Holdings (SMPH): closed at P16.00, down 10.61%
  8. Banco de Oro (BDO): closed at P76.25, down 6.44%
  9. Universal Robina Corp. (URC): closed at P116.30, down 3.65%
  10. Metro Pacific Investments (MPI): closed at P4.77, down 8.09%

Top 10 Gainers

The day’s biggest gainers were the following stocks:

  1. Lodestar Investment Holdings (LIHC), closed at P0.72, up 7.46%
  2. Liberty Telecoms Holdings (LIB), closed at P2.12, up 6.00%
  3. Prime Media Holdings (PRIM), closed at P1.58, up 4.64%
  4. Prime Orion Philippines Inc. (POPI), closed at P0.57, up 3.64%
  5. IRC Properties (IRC), closed at P1.60, up 2.56%
  6. Manila Water Corp. (MWC), closed at P31.60, up 2.10%
  7. Nextstage Inc. (NXT), closed at P1.75, up 1.74%
  8. First Gen Corp – Preferred Shares (FGENG), closed at P115.00, up 1.68%
  9. Abacus Consolidated (ABA), closed at P0.63, up 1.61%
  10. Manulife Financial (MFC), closed at P720.00, up 1.41%

Top 10 Losers

The stocks with the biggest loss in yesterday’s trading were:

  1. Leisure and Resorts World (LR): closed at P6.08,  down 22.05%
  2. ATN Holdings ‘A’ (ATN): closed at P1.07, down 20.15%
  3. Cebu Air Inc. (CEB): closed at P51.55, down 16.72%
  4. Filipino Fund Inc. (FFI): closed at P15.12, down 15.44%
  5. Megaworld Corp. – Warrants (MEGW1): closed at P2.07, down 13.75%
  6. Melco Crown Philippines (MCP): closed at P9.73, down 12.81%
  7. Informationa Capital Technology Ventures (ICTV): closed at P0.410, down 11.83%
  8. Lepanto Consolidated Mining (LC): closed at P0.57, down 10.94%
  9. Security Bank Corp. (SECB): closed at P120.00, down 10.78%
  10. SM Prime Holdings (SMPH): closed at P16.00, down 10.61%

Reasons for the decline in stocks

The drop in stock prices came after the release of the Minutes from the Federal Open Market Committee’s (FOMC) meeting in July showing that majority of the Central Bank officials were supportive of chairman Ben Bernanke’s plan to start the Quantitative Easing (QE3) tapering if the U.S. economy continues to improve.

The Quantitative Easing (QE 3) program is a monetary policy used by the U.S. Federal Reserve to help prop up liquidity in the market. Round 3 of the QE program involves monthly asset purchases of $85 billion intended to improve the U.S. economy.

In July 2013, the Federal Reserve said it might start tapering the QE3 program after the U.S. economy started showing signs of recovery. The release of the July FOMC meeting minutes this week confirmed the plan to start the QE3 tapering. Analysts say the tapering may start as early as September 2013.

Philippine stocks were spared from the selloff early this week after the bourse closed on Monday and Tuesday due to heavy rains caused by typhoon Maring and on Wednesday because of the Ninoy Aquino holiday.

But the selloffs earlier this week in Asian markets still dragged down the Philippine Stock Exchange yesterday.

The Jakarta Composite Index (Indonesia) lost 5.58% on Monday, while the Stock Exchange of Thailand dropped 3.27% on the same day.

About the Author

James Ryan Jonas teaches business strategy, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.1 Billion ($56 Million) worth of retirement funds on behalf of thousands of UP employees.

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