Philippine stocks slumped as much as 3 percent on Monday as worries over a US recession spread throughout the region, triggering a selloff in Japanese stocks that caused the Nikkei to plummet more than 12 percent—its largest drop since 1987.
The Philippine benchmark index (PSEi) pared losses to finish lower by 2.58 percent to 6,434.73, its lowest in a month.
Downside risks ahead
Jonathan Ravelas, veteran forecaster and senior adviser at Reyes Tacandong & Co., warned that the selloff might continue after the PSEi failed to break through the 6,800 resistance zone.
“Watch for a break below 6,400 as 6,000 levels are at risk,” he said.
The 6,000 level could provide strong support as it has been tested multiple times and successfully repelled the bears, Ravelas said.
A potential catalyst this week is the release of inflation data on Tuesday, with Ravelas expecting July inflation to be 3.9 percent due to higher food prices.
Meanwhile, furious selling in Japan erased stock gains, wiping out the year’s progress for Japanese stocks.
Ravelas noted that market turmoil offers savvy investors a chance to buy undervalued but high-quality stocks.
Foreign selling continues
PSE trading turnover stood at around P5.64 billion, with foreign selling reaching P621.93 million by the session’s close.
International Container Terminal Services Inc. (-0.57 percent) was the most heavily traded large-cap stock amid concerns a US recession will impact global trade.
BDO Unibank Inc. also shed 1.28 percent while Universal Robina Corp. and Bank of the Philippine Islands lost 8.7 percent and 2.88 percent, respectively.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
