The stock market fell Wednesday as China’s move to weaken the yuan pummeled developing-nation currencies and on reports that North Korea successfully tested a hydrogen bomb.
The Philippine Stock Exchange Index dropped 21.23 points, or 0.3 percent, to 6,813.90 on a value turnover of P4.3 billion. Losers beat gainers, 101 to 68, with 35 issues unchanged.
Ayala Land Inc., the second-biggest property developer, declined 2.5 percent to P33.10, while parent Ayala Corp. lost 1.4 percent to P732.
SM Prime Holdings Inc., the largest real estate company, fell 1.6 percent to P21.20, while parent SM Investments Corp. dropped 1.2 percent to P840.
Jollibee Foods corp., the biggest fastfood chain, rose 1.9 percent to P214, while Philippine Long Distance Telephone Co., the largest telecommunications firm, added 1.5 percent to P2,030.
Chinese stocks, meanwhile, rose amid government efforts to shore up the share market after the worst start to a year on record. The won dropped to the lowest level in three months. The yuan slid to a five-year low, while Malaysia’s ringgit led a gauge of developing-nation currencies to a record low.
The People’s Bank of China lowered the yuan reference rate to the weakest since April 2011, spurring concern that the government is facing pressure to devalue its currency to revive growth in the world’s second-biggest economy.
“A weaker yuan could initiate other Asian markets to allow their own currencies to weaken to remain competitive with Chinese exports,” said Nescyn Presinede, a trader at Rizal Commercial Banking Corp., which manages $1.8 billion in trust assets. “A continued weakening in the yuan could trigger more volatility in financial markets. Other Asian markets will not stand still from a weaker yuan.”
Stocks in Asia, which swung wildly Monday and Tuesday, extended a miserable start to 2016—hit by another round of weak Chinese economic indicators, sinking oil prices and rising tensions in the Middle East.
Tokyo sank one percent as exporters were hurt by a strong yen, Hong Kong lost one percent, Sydney shed 1.2 percent and Taipei dropped 1.1 percent.
But Shanghai ended 2.3 percent higher.
“There’s word spreading in the market that state funds are buying, but the idea is to hold up the market, not to bolster it by a large margin,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. in Shanghai.
“The market has basically stabilized after the tumble and investors are waiting for further policies that will boost sentiment.”
Regulators had closed trading early Monday because a seven percent fall triggered a new circuit breaker put in place during the summer to prevent sharp losses or gains.
Investors were partly spooked by this Friday’s expiration of a ban imposed in July on certain investors selling stocks. With Bloomberg, AFP