September 05, 2018 at 08:45 pm
Manila Standard Business
The stock market plummeted Wednesday, weighed down by a government report that the inflation rate in August rose to a nine-year high of 6.4 percent from 5.7 percent a month ago.
The Philippine Stock Exchange Index dropped 129.55 points, or 1.6 percent, to 7,752.27 on a value turnover of P5.9 billion. Losers overwhelmed gainers, 146 to 51, with 38 issues unchanged.
Data from the Philippine Statistics Authority on Wednesday showed the faster uptick in consumer prices was driven primarily by sustained increases in the prices of food, transport and tobacco products.
The August inflation was the fastest in more than nine years since 6.6 percent in March 2009 and surpassed estimates both from the government and private sector economists.
The faster inflation rate may prompt the policy-setting Monetary Board of the Bangko Sentral ng Pilipinas to consider further action in its next meeting later this month.
BDO Unibank Inc., the biggest lender in terms of assets, slumped 5.1 percent to P123.30, while Bank of the Philippine Islands, the third-largest bank, fell 2.1 percent to P90.
JG Summit Holdings Inc. of industrialist John Gokongwei declined 3.8 percent to P58, while conglomerate Metro Pacific Investments Corp. also lost 3.8 percent to P5.33.
The rest of Asian markets tumbled Wednesday on growing concerns about emerging market economies, adding to the uncertainty stoked by Donald Trump’s trade rows with China and Canada.
Hong Kong shed 2.3 percent in the afternoon and Shanghai fell 1.7 percent, while Singapore gave up 1.2 percent and Seoul dipped more than one percent.
Sydney fell one percent despite news that the Australian economy expanded far more than expected in the second quarter thanks to a pick-up in exports and consumer spending. The local dollar was marginally higher.
Jakarta led a sell-off in EM equities, diving four percent, while Bangkok lost 0.8 percent.
After Turkey and Argentina’s recent headline-making problems, South Africa became the latest country to spark panic Tuesday with data showing a shock plunge into recession for the one-time economic starlet.
The news sent the rand plunging in a similar way to the Argentine peso and Turkish lira in recent weeks. Observers increasingly fear the problems could spread to other emerging market countries and possibly spill over into major economies.
“South Africa is back in recession and that was not expected,” said Greg McKenna, chief market strategist at AxiTrader.
“The big question is whether this is a... tipping point for EM markets and if the idiosyncratic issues are now adding up to something more structurally pernicious for EM markets. My guess? Yes, it is.”
The brewing crisis has seen currencies in a number of emerging markets—mostly with deep current account deficits—take a hammering.
India’s rupee was sitting at a record low and the Indonesian rupiah at levels last seen during the 1998 Asian financial crisis.
Indonesia said it would take unspecified action against currency speculators and announced plans to delay import-heavy energy projects in order to focus efforts on reducing imports and supporting the rupiah. With AFP