Prices dive in the wake of Lehman’s collapse

MANILA, Philippines - Philippine share prices fell sharply Monday after investors, spooked by the collapse of Lehman Brothers Holdings, Inc. and the sale of Merrill Lynch, dumped stocks in emerging markets. The bellwether dove by 4.15% or 109.96 points to 2,536.16 while the all-share index tumbled by 3.17% or 52.29 points to 1,595.05. Losers swept gainers 92 to 11 while 33 stocks were unchanged. Turnover reached 2.01 billion shares worth P1.89 billion. "[Monday] was a huge drop. It went to show the depth of the housing problem in the US," said Tristan E. Valerio of Lucky Securities, Inc. Jose L. Vistan of AB Capital Securities, Inc. said investors were worried about the condition of other financial institutions in the US especially since the US government, which took over mortgage firms Fannie Mae and Freddie Mac, could only take so much. "Investors were on a cautious mode because of the uncertainties on how things would go in the US. The future looks bleak for the global economy," Mr. Vistan said. "The market is more on the soft side [because] of the latest fundamental [happenings] in the US. People are worried how these will affect the country [US] later," said Harry G. Liu of Summit Securities, Inc. The 158-year-old Wall Street firm Lehman Brothers filed for bankruptcy protection Monday, after British banking giant Barclays decided not to purchase the troubled investment bank because it might have to guarantee Lehman’s trades. In a related development, the Bank of America Corp. Monday agreed to buy Merrill Lynch, the world’s largest brokerage, for roughly $44 billion. "The [local] market technically followed suit. Market sentiment was negative because of everything that happened in the US," Mr. Liu said. All six subindices followed the composite index’s lead. Industrial companies skidded by 4.97% or 150.19 points to 2,870.21 while property shares lost 4.92% or 46.48 points to 896.39. Services stocks retreated by 3.31% or 50.53 points to 1,474.14. Financial companies shed 3.17% or 21.56 points to 657.40, while mining and oil companies lost 3.02% or 194.56 points to 6,239.53. Holding firms slipped by 1.80% or 25.04 points to 1,364.37. Lopez-led Manila Electric Co. lost 9.73% or P5.50 to end at P51 while Ayala Land, Inc. lost 6.97% or P0.75 to P10. Banco de Oro Unibank dove by 6.02% or P2.50 to P39 while the Bank of the Philippine Islands shed 5.49% or P2.50 to P43. Megaworld Corp. slid by 5.33% or eight centavos to P1.42. Index heavyweight Philippine Long Distance Telephone Co. went down by 3.53% or P95 to P2,595. Both "A" and "B" shares of San Miguel Corp. dropped 4.90% or P2.50 to P48.50. Metropolitan Bank and Trust Co. lost 2.63% or P1 to P37. Share-price losses were steep across Asia, with Taiwan stocks ending down 4.09%. Sydney fought back slightly from earlier losses to end the day down 1.8%. Singapore had fallen 2.26% in morning trading and Indian shares tumbled 5.19% within minutes of opening. Several major markets in the region, including Tokyo, Hong Kong, Shanghai and Seoul were closed for public holidays. In the markets that were trading, financial sectors suffered most as investment bank Lehman Brothers, hard-hit by the US subprime real estate meltdown, staged a last-ditch effort to find a buyer. - BusinessWorld