Stocks tumble; Meralco declines

The stock market slumped Wednesday in step with the rest of Asia and on fears Taal Volcano’s eruption could disrupt livestock and fish production in the Southern Tagalog region and lead to higher food prices.

The Philippine Stock Exchange Index plunged 128.85 points, or 1.6 percent, to 7,664.40 on a value turnover of slightly over P7 billion. Losers beat gainers, 118 to 76, with 35 issues unchanged.

The Taal Volcano eruption will have an impact on the trajectory of inflation in the days ahead because the southern Tagalog region is a main contributor to the supply of livestock and fish nationwide, Philippine National Bank said in a report Wednesday.

“We worry that the Taal eruption may put pressure on food prices of livestock particularly chicken and hogs (as well as fish supply) since CALABARZON—Taal’s location and region most affected, is a significant contributor to local production of livestock,” it said.

Manila Electric Co., the biggest retailer of electricity, dropped 4.1 percent to P292.40, while JG Summit Holdings Inc. of the Gokongwei Group fell 3.9 percent to P73.50.

Major power producer Aboitiz Power Corp. declined 3.8 percent to P32.50, while Security Bank Corp., the sixth-largest lender in terms of assets, was down 3.6 percent to P185.

The rest of Asian markets fell Wednesday as investors took their foot off the pedal following weeks of gains, with focus on the signing later in the day of the China-US trade deal.

With few other catalysts to drive buying on Wednesday, regional markets tracked a weak lead from Wall Street.

Tokyo and Shanghai both ended down 0.5 percent, while Hong Kong was off 0.6 percent in the afternoon.

Seoul and Singapore each dropped 0.4 percent, while there were also deep losses in Mumbai, Taipei, Bangkok, and Jakarta, though Sydney and Wellington rose.

While the mood on trading floors was broadly upbeat as tensions between the economic superpowers ease, analysts warned there will not likely be much more progress on the next phase of talks ahead of the November US presidential election.

The mini pact, which has de-escalated a two-year stand-off that has jolted the global economy, saw the White House halve tariffs imposed on September 1 on $120 billion of Chinese goods and cancel another round set for December 15.

In return, Beijing pledged vast sums to buy US products including pork and soybeans.

Still, the next round of negotiations is expected to be the toughest, with key issues including China’s massive subsidies for state industry and forced technology transfer proving key sticking points.

Treasury Secretary Steven Mnuchin denied a report that it could include provisions to roll back more levies on China after the presidential vote, with progress on phase two the key to measures being removed.  

But he did tell Fox Business network: “I think phase one is an enormous step in the right direction.”

Officials said full details would be made public after the signing ceremony in Washington.

“We should not expect further tariff relief until after the November presidential elections, suggesting that today’s agreement is probably as good as it gets for 2020,” said National Australia Bank’s Tapas Strickland. 

Topics: Taal Volcano , eruption , Philippine Stock Exchange Index , Philippine National Bank
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