Share prices sank Thursday as investors took to profit-taking on risk aversion.
The market was greeted by a slower-than-expected economic growth of the Philippines in the third quarter leading to a massive sell down.
Investors also digested the result of the US election which observers expect will spur more protectionist policies that will slow down global growth.
The peso closed lower.
The Philippine Stock Exchange index was down 150.98 points to 7,014.44, a 2.11 percent drop.
The broader All Shares index was down 78.33 points or 1.97 percent to 3,891.64.
Losers edged gainers 167 to 46 with 40 stocks unchanged. Trading turnover reached P9.72 billion.
The peso closed at 58.73 to the dollar, down from 58.661 on Wednesday.
The currency opened at 58.80 and hit a high of 58.68 and a low of 58.805. Trading turnover reached $1.57 billion.
Overseas, China-exposed Asian currencies weakened as investors priced in heightened tensions around security and trade in a second term for Donald Trump as US president.
Trump has promised to slap new and potentially hefty tariffs on a wide swath of goods from countries including China and Mexico, while his vice presidential candidate, JD Vance, has proposed a 10 percent tax on remittances.
The Fed is expected to reduce rates by 25 basis points later in the day but the focus now will squarely be clues for whether or not it will cut rates in December.
Analysts believe the response from regional central banks would depend on the magnitude of growth downside and the extent of currency depreciation, which could limit their ability to cut rates immediately.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the slowdown in the economic growth could still warrant further local rate cuts from the Bangko Sentral ng Pilipinas (BSP), especially if inflation stays within the BSP’s target range of 2 to 4 percent, matching any rate cut of the US Federal Reserves.
“Rate cuts by the US Fed that could be matched locally would help lower borrowing costs, increase demand for loans, boost demand for investments and expansion projects, boost global trade in terms of exports and imports, create more jobs, increase business and other economic activities; but rate cuts would realistically have some lag effects as interest rates still relatively elevated pending further rate cuts expected from 2024-2026,” Ricafort said.
The Bank of Philippine Islands (BPI), in a note, said “external developments” may also prevent the BSP from cutting its rates.
“Uncertainties abroad have intensified following the election victory of US President Trump, causing more volatility in the peso. The BSP may find it more appropriate to keep rates steady if the peso weakens sharply in the coming weeks,” BPI said.
Most actively traded International Container Terminal Services Inc. up P4.80 to P400. Ayala Land Inc. down P1.60 to P31.40. BDO Unibank Inc. was down P2 to P148. SM Prime Holdings Inc. was down P1.60 to P28.20. Bank of the Philippine Islands was down P3.80 to P140. SM Investments Corp. was down P22 to 940. Metropolitan Bank and Trust Co. was down P1.80 to 76. Ayala Corp. was steady at P705. Manila Electric Co. was down P13 to 485. DigiPlus Interactive Corp. was down P0.30 to P20.60.
