Unprecedented: Local financial markets also locked down
MANILA, Philippines — In an unprecedented move, unseen even in mainland China, the epicenter of the coronavirus pandemic, the Philippines shut down its financial markets indefinitely starting March 17.
The country’s stock, bond and foreign exchange markets were locked down as President Duterte ordered that only private establishments providing basic necessities, as well as those related to food and medicine production, business process outsourcing and export-oriented industries, could remain open during the “enhanced community quarantine” that now covers the whole of Luzon.
But financial market infrastructure regulators are seeking an exemption from the month-long quarantine.
The Philippine Stock Exchange (PSE) hopes to reopen the stock market by March 19, while the banking community is targeting the resumption of foreign exchange and bond trading by March 18.
In an advisory issued late Monday night, PSE president Ramon Monzon announced the suspension of trading until further notice “to ensure the safety of employees and traders in light of the escalating cases of the coronavirus disease (COVID-19).”
Trading was suspended when the main-share PSE index (PSEi) was diving deeper into bear territory.
The PSEi has slid by 3,722.63 points or 41 percent from the record finish of 9,058 in early 2018. Much of the decline was seen this year, when it lost a total of 2,479.89 points, or 31.7 percent so far.
At its closing of 5,335.37 on Monday, the PSEi was at its lowest level since October 2012.
Despite the loss of opportunities, many trading participants understood the need to declare a trading holiday.
As any mass gathering is prohibited, it is impossible to operate the PSE trading floor, which typically houses around 150 traders.
Even if trading were to shift to an offsite channel, that would still require backroom officers to work and messengers to ensure next-day delivery as required by regulators, one stock broker said.
The Philippine Dealing System Holdings (PDS) Group also announced the suspension of all fixed-income trading, clearing, settlement, payment, transfer operations and depository operations “in line with the current public health emergency and the exclusion of the PDS Group from the exemptions [from] the enhanced community quarantine.”
Banks and money-transfer services are among those that can do business as they are exempted from the virtual lockdown.
The suspension of public transportation, however, has made it difficult for bank personnel to report for work.
Philippine National Bank (PNB) said its employees encountered challenges as police checkpoints were turning them away, preventing some branches from opening while causing others to delay operating hours.
PNB urged clients to use mobile banking and internet banking services instead.
The shutdown of the PSE may encourage other exchanges to follow suit. Global markets are in meltdown as the pandemic spreads, with roughly $14 trillion in shareholder value erased and even safe assets such as gold have been sold to cover losses.
China’s Greater Bay Area still has investment opportunities amid political unrest, slowing economy.
Even amid a slowing Chinese economy and ongoing political unrest in Hong Kong, there are still many business and investment opportunities in the country’s Greater Bay Area, said Xiao Wunan, executive vice chairman of the China-backed Asia Pacific Exchange and Cooperation Foundation (APECF).
The Guangdong-Hong Kong-Macau Greater Bay Area is made up of nine Chinese cities in Guangdong province and two special administrative territories, Hong Kong and Macau.
At the East Tech West conference in the Nansha district of Guangzhou, China, Xiao told CNBC in Mandarin, that the Greater Bay Area is not only serving Guangdong province but it is an integral economic, historical and political part of China.
He added that the region has always been a “window” for China to the outside world and vice versa. Historically, Guangdong has always been a port of entry and a big trading hub. And while Nansha is a leading innovative area in the province, he said there are many more opportunities and beyond the district as well.
Beijing has said the Chinese economy has been undergoing a supply side reform for many years now, and Xiao said that during the transition, the economy “will suffer some short-term pain.”
He pointed out that, “especially for conventional sectors and labor intensive industries, and there will be pressure to push for stricter environmental protection regulations,” according to CNBC’s translation.
Employees work on a mobile phone assembly line at a Huawei Technologies Co. production base in Dongguan, China.
Xiao, who used to work in the Chinese government, said the country’s continued heavy reliance on manufacturing will be “unsustainable,” and on top of that China is faced with an aging population.
PH suspends stock market trade over virus fears
The Philippines suspended trade on its local stock exchange Tuesday, becoming the first country to close its financial market over coronavirus fears.
President Rodrigo Duterte on Monday ordered most of the 55 million people on the main island of Luzon, which includes the capital Manila, to stay at home for the next month after social distancing measures failed to keep people away from one another.
Philippine Stock Exchange President Ramon Monzon told traders in a memo that trading is suspended starting Tuesday “until further notice” to move in step with Duterte’s order.
Monzon said the suspension was also “to ensure the safety of employees and traders in light of the escalating cases of the coronavirus disease”.
Confirmed cases in the Philippines have jumped to 142, with 12 deaths and the government has unveiled a 27.1 billion peso($526.6 million) package to fund hospitals fighting the virus and provide reprieve amid a slowdown in economic activity.
The benchmark PSE index plunged 7.9 percent during shortened trading on Monday as investors reeled from the virus’ economic impact.
The suspension order came as stock markets and oil prices went into freefall after central banks’ fresh stimulus measures failed to dampen fears of the global pandemic.
Shares in Tokyo’s Nikkei 225 index dropped by as much as 3.66 percent at Tuesday’s open before recovering about 70 minutes after the opening bell.
Overnight, Wall Street indices fell in their worst day since 1987, with the S&P 500 and Nasdaq dropping about 12 percent and the Dow sinking nearly 13 percent.
Gokongwei sets P100M COVID-19 relief fund, waives mall rental
MANILA, Philippine — The Gokongwei group has created a P100-million fund to help the country battle the coronavirus (COVID-19) pandemic while mobilizing various companies under the conglomerate to support stakeholders.
“As an immediate step, GBF will provide urgently needed personal protective equipment (PPE) such as surgical masks for healthcare frontliners, as well as rapid test kits. The U.P. Medical Foundation and PGH Medical Foundation are among the select institutions in GBF’s priority list,” read a statement from the John Gokongwei (JG) Summit Corporate Affairs on Wednesday.
Aside from this initiative, various companies under the Gokongwei Group have also extended their own efforts to assist various stakeholders in the battle against the pandemic.
Property arm Robinsons Land Corp. (RLC) has agreed to waive rental charges for all non-operational tenants of its various malls during the period during which the mall is closed because of the Luzon-wide community quarantine. Through the rent condonation, RLC aims to assist their tenants reallocate funds and allow them to extend financial assistance to their employees.
“Through the rent condonation, RLC can assist their tenant establishments reallocate funds and allow them to extend financial assistance to their employees for this emergency,” read the statement.
Robinsons Bank has also announced payment extension to its customers for various loan products.
On the P100-million fund established through philanthropic arm the Gokongwei Brothers Foundation (GBF), two key beneficiaries were identified: national and local frontline health providers currently serving in various hospitals to combat COVID-19 and the local communities where various businesses under the group operate.
As an immediate step, GBF will provide urgently needed personal protective equipment (PPE), such as surgical masks, for health care front liners, as well as rapid test kits. The U.P. Medical Foundation Inc. and PGH Medical Foundation, Inc. are among the select institutions in GBF’s priority list.
The fund earmarked by GBF is over and above the ongoing initiatives that the various companies under the Gokongwei Group are spearheading on their own.
For instance, RLC is providing support for the purchase of test kits for various hospitals in the National Capital Region, while food manufacturing arm Universal Robina Corp. is donating food products like Great Taste coffee, Magic Crackers, Nissin Cup Noodles, Refresh Mineral Water and Vitasoy drinks for distribution to health workers in different hospitals.
The group’s retail arm, Robinsons Retail Holdings Inc. – through its various retails stores such as Robinsons Supermarkets, Rustan’s Marketplace, Shopwise, Ministop convenience stores, drugstore chains South Star Drugs and TGP (The Generics Pharmacy), and its Handyman hardware shops – have remained open to serve the needs of Filipinos consumers on a limited time period in compliance with the community quarantine in place.
Since the COVID-19 situation escalated, aviation arm Cebu Pacific has been enabling thousands of passengers, who have flights until April 30, the opportunity to rebook their flight anytime until June 30 or place the cost of the ticket in a travel fund to be used for future travel.