Philippines: Renewed banking fears pull down peso, stocks

THE peso and stock market both fell on Wednesday as an earnings report by a troubled US bank reignited investor fears.

The currency weakened by 8 centavos to close at P55.62 against the dollar while the benchmark Philippine Stock Exchange index (PSEi) lost 53.15 points, or 0.81 percent, to end the day at 6,540.24.

The broader All Shares followed, shedding 14.53 points, or 0.41 percent, to 3,492.96.

“Philippine shares edged lower following First Republic Bank’s statement that its deposits dropped by 40 percent year on year to $104.50 billion in the first quart of 2023, which reignited concerns about the banking sector,” Regina Capital Development Corp. Managing Director Luis Limlingan said.

San Francisco-based First Republic had to be extended a $30-billion lifeline last month by a consortium of US banks. It had come under intense scrutiny following the collapse of Silicon Valley Bank and Signature Bank.

Investor fears quickly spread outside the US and Switzerland’s scandal-hit Credit Suisse also had to be taken over by rival UBS.

“Another factor that caused investors to stay on the sidelines was the detection of the first case of Omicron subvariant XBB1.16 or Arcturus,” Limlingan also said.

“It has been detected in 33 countries and is driving a surge in Covid-19 cases in India.”

China Bank Capital Corp. Managing Director Juan Paolo Colet, meanwhile, said the PSEi “traded in the red… with daily turnover rising to nearly P5.10 billion as investors took profits or cut losses.”

“This was due in large part to the drop in US stock markets last night, where we saw renewed worries after First Republic Bank reported more than $100 billion in deposit outflows and saw its market value plummet 49 percent.”

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., also cited First Republic’s finances as having contributed to the peso and PSEi’s decline.

Philstocks Financial Inc. research associate Claire Alviar, meanwhile, said that investors were still waiting for more first-quarter earnings results.

The peso opened trading at P55.57:$1 and ranged from P55.54 to P55.71. Volume reached $1.233 trillion, slightly lower than the previous day’s $1.270 trillion.

At the stock market, the services, and mining and oil indices were Wednesday’s only gainers, rising by 0.13 percent and 1.3 percent, respectively.

All others fell with financials down the most by 1.42 percent.

Just under 767 million shares worth P5.45 billion changed hands.

Decliners edged out advancers, 101 to 95, while 47 securities remained unchanged.

Source: https://www.manilatimes.net/2023/04/27/business/top-business/renewed-banking-fears-pull-down-peso-stocks/1888867