Stocks slumped Tuesday, following reports Typhoon Ompong destroyed more than P14 billion worth of crops in Luzon which could further tighten food supply and lift prices.
The Philippine Stock Exchange index, the 30-company benchmark, dropped 127 points, or 1.7 percent, to close at 7,286.34 Tuesday, the lowest in more than two months. It was also down 14.9 percent since the start of the year.
The heavier index, representing all shares, also tumbled 61 points, or 1.4 percent, to settle at 4,488.71, on a value turnover of P6.6 billion. Losers outnumbered gainers, 155 to 50, while 35 issues were unchanged.
Four of the 20 most active stocks ended in the green, led by Vulcan Industrial & Mining which climbed 3.1 percent to P2.35 and Robinsons Retail Holdings Inc. which rose 1.9 percent to P82.
Tight food prices pushed inflation rate to a nine-year high of 6.4 percent in August, something that could further increase this month in the aftermath of the world’s strongest typhoon which left dozens dead or missing and thousands of hectares of rice farms inundated in Luzon.
Meanwhile, Asian markets mostly rose Tuesday after Donald Trump said he would thump China with another round of tariffs but give some room for talks before jacking them up to the highest rate.
The latest volley from the White House will see $200 billion worth of goods taxed at 10 percent from Sept. 24, going up to 25 percent from Jan. 1 if the sides are unable to hammer out a deal.
Trump also warned that another $267 billion had been lined up if Beijing retaliates. China on Tuesday warned it would “take countermeasures” after the latest threats.
With $50 billion of goods already being hit, that would mean Washington will have subjected virtually all goods China ships to the US to tariffs.
However, after an early sell-off, regional markets enjoyed a bounce on hopes officials from the world’s top two economies will be able to thrash out an agreement before the end of the year.
The optimism has been boosted by the fact Trump left off some key items from the latest target list, while he is also due to meet Chinese President Xi Jinping in November and will likely want a deal in place.
“While the US tariffs salvo is hardly middling, it’s not as bad as it could have been, so unless China hits with draconian measures, markets should remain supported after this morning’s knee-jerk reactions,” said Stephen Innes, head of Asia-Pacific trading at Oanda.
“Ultimately the graduated tariff hike allows more room to negotiate before the thumping 25 percent levy gets triggered, so perhaps China may temper their response accordingly,” Innes said.
By the end of the day, Shanghai had rallied 1.8 percent and Tokyo was up 1.4 percent while Hong Kong gained 0.6 percent in the afternoon. Seoul gained 0.3 percent and Wellington put on 0.5 percent.
However, Sydney dipped 0.4 percent and Singapore 0.1 percent.
“There’s still time and room for China and US to engage in negotiations,” Zhang Gang, Shanghai-based strategist with Central China Securities, told Bloomberg News.
“The US moves are completely uncontrollable but China can manage its policies to counter the impact and stabilise its economy.”
Regional currencies also saw an afternoon recovery having been in the red earlier. The yuan was flat, while the South Korean won and the Australian dollar were 0.3 percent higher.
The Mexican peso gained 0.2 percent, the Russian ruble edged 0.3 percent higher and South Africa’s rand put on 0.4 percent.
However, Indonesia’s rupiah fell 0.2 percent as it wallows around levels last seen in 1998 during the Asian financial crisis.
In early trade London fell 0.2 percent, Paris was up 0.1 percent and Frankfurt was flat. With AFP