Stocks fell Tuesday after Monday’s national elections that saw Ferdinand Marcos Jr. taking a big lead over his closest rival, and following a selloff in the global market.
The Philippine Stock Exchange Index declined 38.97 points or 0.58 percent to 6,720.93 after diving to an intra-day low of 6,547.44 before recouping most of the losses as the market closed.
AAA Securities president William Cabangon said while some will be quick to attribute the weak opening to the election outcome, shares opened broadly in line with globals stocks which had their worst day since June 2020.
“I think the market reaction shows that the Marcos Jr. was largely priced in and expected by investors,” Cabangon said. “This is in-line with the polling data, which had him in commanding lead since the start of the election period, so there is no surprise in that regard.”
Meanwhile, Chris Mangun head of research of AAA Securities, said the peaceful transition of the government would be the ultimate positive catalyst for the market moving forward.
“The new government is expected to continue the policies of the previous administration which kept the economy on the right track despite the negative effects of the pandemic,” Mangun said.
The rest of Asian equities mostly sank Tuesday and oil prices tumbled following a rout on Wall Street as anxieties were fanned over rising US interest rates, surging inflation and the impact of China’s prolonged COVID lockdowns.
Stock markets have been on a tempestuous ride this year, with Wall Street suffering another hit on Monday as the tech-rich Nasdaq slumped more than four percent, while the S&P 500 ended below 4,000 points for the first time since March 2021.
Steep declines in China’s April exports—due to Beijing’s staunch adherence to a zero- COVID policy that has placed millions under lockdown—and volatility in crude partly due to Russia’s war in Ukraine have also hastened selling.
“This rather precipitous drop in equity markets has been building for several months,” said Clifford Bennett, chief economist at ACY Securities.
“The fundamentals of war, inflation, rate hikes and supply-chain disruption are all individually significant headwinds. When combined, equity markets have no way through.”
US stock markets took a dive late last week after the Federal Reserve raised interest rates by a half-percentage point and flagged more aggressive hikes ahead to tackle decades-high inflation.
Stoking global inflationary pressures are lockdowns in dozens of locations across China—from the manufacturing hubs of Shenzhen and Shanghai to the breadbasket province of Jilin—wreaking havoc on supply chains over recent months.
By Tuesday afternoon, the equities plunge in Asia had eased, and European stocks in Frankfurt, Paris and London rebounded as dip buyers sent markets rallying after the wreckage from Monday’s rout.
“For now, investors need to be prepared for continued volatility,” Solita Marcelli, Americas chief investment officer at UBS Global Wealth Management, wrote in a note, according to Bloomberg.
Tokyo on Tuesday closed down 0.6 percent, as Japanese traders fretted over US monetary tightening. Slumps seen in Seoul, Wellington, Singapore and Jakarta eased.
“Risk markets remain on shaky ground,” said Stephen Innes of SPI Asset Management. With AFP