Investors on ‘safe haven’ selling – BSP official

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said the local financial markets are swamped by chaotic sentiments at the moment, and in mirroring the massive sell-offs across the globe, is decidedly on a "safe haven" mode.

“What we saw (Monday) continues to derive from greater market uncertainty and negative sentiment,” commented Guinigundo.

Investors are still on “safe haven” sentiment at the start of market day Tuesday, with benchmark stocks index already on a selling mode before technical glitches forced the Philippine Stock Exchange to halt trading at 10:02:22 in the morning.

At the Philippine Dealing System, the peso opened a little stronger at P46.79 from Monday’s close of P46.81.

Monetary officials are of the opinion that Monday’s losses – with the PSEi losing its biggest one-day nosedive in two years – could continue as global markets are still twitchy over the Chinese yuan’s surprised devaluation.

"Investors and fund managers are more driven by safe haven mentality (right now) in view of the continuing consolidation of Chinese yuan (CNY) and equity markets," said Guinigundo.

He reiterated that not only the CNY, but that several factors are aggravating markets, such as decline in commodity prices and the eventual lift off of the US interest rates.

"The contagion and spill over effects remain substantial,” said Guinigundo. Under these circumstances and in these times, he noted that domestic market players would do themselves a big favor if they do not lose sight of the fact that it is a globalized environment they are operating on, in which “developments could cross borders and cause some collateral impact."

"The challenge is to ensure that our macroeconomic fundamentals are our ultimate shield to keep our resiliency (and this) requires flexible and nimble conduct of public policy, always anchored on vigilant monitoring and surveillance,” he said

“We continue to believe our economic circumstance remains positive and sound,” added Guinigundo.