RP stocks plunged to lowest in 4 years

October 28, 2008 § Leave a comment

Many followed the fearful one

Many followed the fearful one

It was a bloodbath. Anxious about the impending return to a veritable financial ice age, investors engaged on what analysts say was a frenetic selling binge yesterday. Trading was so traumatic that it was suspended for 15 minutes just to control the steady slide down south of the exchange.

Two banks, namely Banco de Oro and Export and Import Bank were the biggest losers, after investors dumped their stocks. Investors sold their BDO stocks after the bank reported a 1.3 billion peso loss due to their Lehman brothers’ exposure. While EXIM bank stocks remain very weak in trading.

Fears and uncertainty are gripping the stock market. Investors are quite uncertain if the local economy can really withstand the full effects of a global recession. Some analysts say investor confidence in the leadership of the economy is directly affecting the bourse, since more and more investors are selling now, anticipating a further depreciation of their stocks.

However, some analysts see that investors themselves are lacking money, hence, many of them are dumping stocks seen as “weak”.  A stock that got a 5% depreciation in price is considered weak already.

Analysts say this “losing trend” will continue for many weeks to come, unless a “miracle” happens in the global economy. 

With banks under assault and there’s uncertainty as to the capability of the local economy to really generate internal activity, many investors are pessimistic about the Philippine situation. 

In this kind of situation, investors should shift their focus from equity trading into the money market. The peso is expected to breach the 50 peso to a dollar mark by November and it could further slide into the 51-52 range by the end of the year, leading to the first quarter of 2009. The BSP is not in a very good position to defend the continued slide of the peso since most of its resources are being earmarked for the government’s crisis contingency fund. 

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