Turkey crisis fears spark market drop

By Manila Times

Aug. 14–The stock market fell by over 2 percent on Monday, tracking global declines triggered by fears that an economic crisis in Turkey could spread elsewhere.

The benchmark Philippine Stock Exchange index (PSEi) dropped by 2.17 percent or 169.71 points to finish at 7,635.27 while the wider All Shares declined 1.74 percent or 82.16 points to end at 4,632.53.

Regina Capital Development Corp. head of sales Luis Limlingan blamed the losses on negative market reaction to the collapse of the Turkish lira, which fell by over 16 percent last Friday to new record lows as tensions between Ankara and Washington intensified.

European markets and Wall Street closed the week lower and the crisis spilled over to Asia on Monday.

The Nikkei dropped by 1.98 percent, Hong Kong lost 1.52 percent and Singapore also fell by 1.02 percent.

Jakarta, which last week reported its biggest current account deficit in about four years, plunged by 3.29 percent.

“With the mood suddenly turning sour for regional markets, we could see the area of 7,500 as the PSEi’s initial support level in the next few days,” Papa Securities Corp. trader Gio Perez said.

Piper Chaucer Tan, research analyst at Philstocks Financial, Inc. said investors were also pricing in last week’s disappointing inflation and second quarter growth data and a subsequent 50-basis point Bangko Sentral ng Pilipinas (BSP) policy rate hike.

Inflation spiked to 5.7 percent in July, prompting the BSP’s policymaking Monetary Board to shift from the 25-bps adjustments announced in May and June. The rate hike also came despite economic growth having slowed to 6.0 percent in the second quarter from 6.6 percent in the first three months of the year.

“Also, it is the start of the ghost month, which will reflect a decrease in [trading]volume,” Tan said, a view shared by Limlingan.

In the Chinese lunar calendar, ghost month is when investors are supposed to hold off from making big-ticket investments. Buddhist and Taoist beliefs hold that restless spirits cause mischief during the period.

All sectoral results in Manila settled in the red led by property, which fell by 2.89 percent.

Volume turnover stood at 1.4 billion issues valued at P5.17 billion.

Decliners led advancers, 140 to 58, while 39 issues were unchanged.

This article provided by NewsEdge.