Share prices ended lower Tuesday as risk aversion continue to hit the market amid the financial crisis in the US.
The peso closed down.
Luis Limlingan, managing director at Regina Capital and Development Corp., said the drop was driven by investors’ fears the collapse of Silicon Valley Bank (SVB) in the US “could be the start of more banking headwinds,” that will also affect the local banking sector.
The Bankers Association of the Philippines (BAP) soothed public’s concern of a spillover of the US financial meltdown into the Philippines.
In a statement, the BAP said recent developments in the US financial system “have no substantial or material impact on Philippine banks.”
“Banks have diversified deposit bases that include all sectors of the Philippine economy, allowing them to continuously provide the liquidity needs of their clients. Additionally, banks in the Philippines continue to have capital and liquidity ratios that exceed the requirements set by the Bangko Sentral ng Pilipinas (BSP),” BAP said.
“The prudential measures implemented by the BSP provide the necessary support that allows the Philippine banking system to withstand economic shocks. The BAP continues to work with BSP and other stakeholders to pursue reforms that will lead to an even stronger financial system that sufficiently provides the financial needs of the banking public,” it added.
Claire Alviar, analyst at Philstocks Financial Inc., noted the risk aversion is not just in the Philippines but is displayed regionally with “almost all markets in the red.”
“Currently, investors’ sentiments were negative given the situation, especially ahead of the interest rate decision of the Federal Reserve,” Alviar said.
The Philippine Stock Exchange index (PSEi) was down 151.12 points, a 2.31 percent drop to 6,393.33.
The broader all shares index was down 64.35 points or 1.83 percent to 3,454.48.
Losers edged gainers 143 to 49 with 47 stocks unchanged. Trading turnover reached P6.78 billion.
The peso closed at 55.08 to the dollar, down from 54.93 on Monday. It opened at 55.05 and hit a high of 54.88 and a low of 55.14. Trading turnover reached $1.13 billion.
Most Asian currencies lost ground on Tuesday as the US banking sector crisis unnerved investors, although the Malaysian ringgit bucked the trend to climb higher.
US regional bank shares saw heavy selling overnight following the shutdown of Silicon Valley Bank and Signature Bank.
“Investors will closely watch the US CPI (consumer price index) reading released tonight, though it is likely to take a back seat to the current banking crisis,” analysts at OCBC Bank said in a note.
The CPI for February is expected to rise 0.4 percent on a month-over-month basis, and 6 percent annually, according to a Reuters poll. The data has taken on added relevance in recent days following the turmoil in the banking sector and could further complicate views on Federal Reserve’s stance on rate hikes.
Over at the local bourse, most actively traded Ayala Land Inc. was down P0.05 to P25.30.
International Container Terminal Services Inc. was down P7.50 to P199.90. BDO Unibank Inc. was down P2.60 to P119.40. SM Prime Holdings Inc. was down P1.30 to P34.40.
Metropolitan Bank and Trust Co. was down P2.40 to P57. SM Investments Corp. was down P15 to P860. Globe Telecom Inc. was down P23 to P1,777. Bank of the Philippine Islands was down P1.30 to P103.80. Manila Electric Co. was down P14.80. San Miguel Food and Beverage Inc. was down P0.55 to 52.95.
