Stock market plunges on trade row, peso fears

THE stock market nosedived to the 7,300 level on Monday, pulled down by a weaker peso and fears of a full-blown global trade war, but managed to pare its losses to end the day back in 7,400 territory.

The bellwether Philippine Stock Exchange index (PSEi) fell by as much as 2.23 percent in morning trade, hitting an intraday low of 7,328.30, before staging a partial rebound to a 7,414.11 close — still 115.43 points or 1.53 percent down from last Thursday.

Philippine financial markets were closed last Friday for the Eid al-Fitr holiday.

The wider All Shares, meanwhile, declined by 1.35 percent or 62.14 points to finish at 4,531.04.

Timson Securities, Inc. trader Jervin de Celis pointed to renewed trade tensions between China and the United States, which sent most Asian stock markets tumbling on Monday.

Washington on Friday announced the imposition of tariffs on Chinese imports worth $34 billion, prompting a like-forlike retaliation from Beijing.

With both countries among the Philippines’ biggest trading partners, Timson’s de Celis said local market sentiment became “subdued.”

“We also have to consider that trade wars are not good for the global economy so this poses a threat to global growth in the long term, especially now that central banks have been raising rates to curb the negative effect of inflation,” he added.

Luis Limlingan, managing director at Regina Capital Development Corp., said investors chose to cash in as the peso also fell further on Monday.

The local currency lost 21 centavos to hit P53.48:$1 — a new 12-year low — with traders pointing to trade war concerns and more aggressive tightening by the US Federal Reserve as factors.