Philippine markets drop on SVB spillover fears, local economic data

Philippine financial markets weakened on Tuesday, dragged by fears over the potential spillover from the recent collapse of Silicon Valley Bank (SVB), and after the release of local economic data.

The main PSEi dropped 151.12 points or 2.31% to 6,393.33, marking the fourth straight day of losses to hit the lowest level in over two months, since December 20, 2022.

Meanwhile the broader All Shares index shed 64.35 points or 1.83% to 3,454.48.

All subindices posted declines, led by holding firms which dropped 2.52%, property by 2.14%, industrial by 2.12%, services by 1.96%, financials by 1.83%, and mining and oil by 0.84%.

“Philippine shares fell below the 6,500 support as investors bet the collapse at Silicon Valley Bank could be the start of more banking headwinds in the US,” Regina Capital Development Corp. head of sales Luis Limlingan said in a mobile message.

American regulators last week closed down SVB, the country’s 16th largest bank by assets with $209 billion assets and $175.4-billion in deposits at the end of 2022.

Assets of the bank were seized after it took a $1.8-billion loss in the sale of $21-billion worth of securities, with the collapse driving fears of a widespread impact on the American banking system.

Another trader from a separate firm said market players are now fleeing riskier assets like equities, especially those in emerging markets such as the Philippines.

Meanwhile, the Philippine peso shed 15 centavos to close at P55.08:$1 from Monday’s finish of P54.93:$1.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed Tuesday’s weakness to the latest trade data, which pointed a wider deficit in January.

Preliminary data released by the Philippine Statistics Authority (PSA) showed that the balance of trade in goods (BoT-G) posted a $5.738-billion deficit, the biggest since the $6.430-billion deficit in August 2022.

“The peso still relatively stable at familiar ranges recently after the recent signals from local monetary authorities that they are ready to use tools available in the policy toolkit to help stabilize inflation,” Ricafort said.

The Monetary Board of the BSP has already hiked key policy rates by 400 basis points since May 2022, with the latest being a 50-basis point increase that took effect on February 17. The next meeting is scheduled on March 23.—AOL, GMA Integrated News