For newbie Filipino investors who just started trading stocks, a huge price drop of the PSE index could be terrifying. A price drop in the stock market is not entirely new, but price losses of a high single digit could be scary for first-time investors.
Interestingly, though, the worst performance of the Philippine Stock Exchange index (PSEi) was a humongous 12.27% index decline — in just one day! — which happened on October 27, 2008.
Here’s a list of huge one-day price drops that happened in the Philippine stock market in the last decade.
Huge 1-Day Losses in the Philippine Stock Exchange
October 27, 2008 (1-Day Price Drop of -12.27%)
The PSE recorded what could be the biggest one-day price drop in recent history, falling 12.27% in the aftermath of the bankruptcy filing of investment bank Lehman Brothers (see also: Why AIG was bailed out but not Lehman Brothers). The steep drop was also caused by negative overall market sentiment and global sell-offs since the United States was also in the middle of its subprime mortgage crisis during this time.
June 13, 2013 (1-Day Price Drop of -6.75%)
Huge outflow in foreign funds contributed to a sharp 6.75% one-day decline of the PSE. Foreign investment funds were being siphoned away from emerging markets, such as the Philippines, back to developed economies after the US Federal Reserve announced it will soon end the Quantitative Easing (QE3) liquidity infusion program. (Read: What is Quantitative Easing or QE3?)
August 24, 2015 (1-Day Price Drop of -6.70%)
The index settled at 6,791.01 points, a sharp one-day fall of 6.7%. More than 212 stocks declined in value versus only 13 that managed to record a price increase.
The primary culprit is said to be concerns about China, especially its declining growth rate. Weak manufacturing output signaled that China’s GDP growth is falling faster than expectations. At the same time, sell-offs in China’s stock markets fueled concerns about market volatility. The Shanghai stock market, for instance, has fallen since its peak in June 2015 — with 30% of the value being wiped out in just 3 months.
August 22, 2013 (1-Day Price Drop of -5.96%)
Philippine stocks declined 5.96% after a report of the Federal Open Market Committee (FOMC) of the US Federal Reserve was released showing that majority of the Fed members support the termination of the Quantitative Easing (QE3) program.
August 9, 2011 (1-Day Price Drop of -4.02%)
Standard & Poor’s downgraded the United States’ credit rating, sparking a 4.3% drop in the Dow Jones and a 5% drop in Nasdaq on the same day. Hours later, Philippine stocks followed suit, recording a 4.02% index sell-off. (Read: Impact of the US Credit Rating downgrade by S&P)
May 23, 2006 (1-Day Price Drop of -3.97%)
On May 23, 2006 the PSEi fell by 3.97%. Absent any major external or local economic issue, the sell-off was blamed on fears that foreign funds (“hot money”) invested in the country may leave due to rising interest rates in the US.
Market crashes and stock price meltdowns are a regular part of any stock market. Our hope is that Filipino investors have become mature and smart enough to go with the cycle.
January 31, 2018 (1-Day Price Drop of -1.64%)
The PSEi fell more than 200 points and recorded a huge intraday loss of 2.42%. This after several days of price surges with the PSEi settling above 9,000 points. Stock prices, however, recovered before the day’s close, but the index still ended today with a price loss of -1.64% compared to the previous day’s ending level of 9,058.62.
March 20, 2018 (1-Day Price Drop of -2.14%)
The PSEi again dropped massively, shedding 175.94 points to end at an index level of 8,059.60. This represented a 2.14% price decline from the previous trading day. Philippine stocks tracked U.S. equity markets which also suffered from a slump the night before, with the Dow Jones closing at 24,610.91 points, down 1.35%, and the NASDAQ closing at 7,344.242 points, down 1.84%. U.S. stocks declined following reports that U.S. President Donald Trump is planning to impose tariffs on imports from China and restrictions on Chinese investments in the U.S.
Enjoy the whirlwind ride! :)
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- Why People Lose Money in Stocks: The Cycle of Emotions in Stock Investing
- It’s not easy to make money in stocks
- Is stock market investing for you?
- 3 Important Lessons I Learned about Stock Trading