By Revin Mikhael D. Ochave, Reporter
THE Philippine Stock Exchange (PSE) plummeted over 4% to a 30-month low on Monday amid a global sell-off as US President Donald J. Trump doubled down on his aggressive tariff plan.
This comes as Cebu-based fuel retailer Top Line Business Development Corp. (Topline) is set to make its stock market debut on Tuesday. This is the first initial public offering (IPO) at the PSE this year.
The bellwether PSE index (PSEi) on Monday dropped by 4.29% or 261.34 points to close at 5,822.85, while the broader all shares index fell by 4.02% or 146.67 points to 3,496.77.
This was the PSEi’s lowest close in 30 months or since the 5,783.15 finish on Oct. 3, 2022. It also marked the PSEi’s return to bear market territory as it was down by 23.4% from the immediate high of 7,604.61 posted on Oct. 7 last year.
The PSEi’s 4.29% decline on Monday was also the biggest one-day drop in more than 57 months or since the 4.82% drop on June 15, 2020.
The last time that the PSEi closed at 5,800 level was more than two months ago, when it finished at 5,883.04 on Feb. 3.
DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said the market declined due to concerns over the US reciprocal tariffs.
“The market saw heavy selling today amid heightened concerns over tariffs and renewed trade war tensions, which could lead to a global trade slowdown and potentially tip the US into a recession,” Mr. Tin said in a Viber message.
Mr. Trump on Sunday warned foreign governments they would have to pay “a lot of money” to lift sweeping tariffs, characterizing the duties as “medicine” and delivering more pain for global financial markets on Monday, Reuters reported.
Asian equity markets sank across the board and oil prices plummeted as investors feared that the duties unveiled last week could lead to higher prices, weaker demand and potentially a global recession.
JPMorgan last week raised its odds for a US and global recession to 60%, while Goldman Sachs also increased the odds to 45% in the next 12 months.
“Adding to the pressure, foreign fund managers typically have minimal exposure to Philippine equities, so offloading a significant portion of their local holdings has little impact on their overall portfolios — making them more willing to sell aggressively in times of uncertainty,” Mr. Tin said.
All indices closed in the red, led by mining and oil which slumped by 8.75%, followed by services (-4.97%) and industrial (-4.81%).
At the same time, the peso sank by 60.9 centavos (1.06%) to close at P57.43 per dollar on Monday from its P56.821 finish on Friday. This was the biggest one-day drop since the 1.08% decline on Sept. 9, 2024.
Year to date, the peso is still up by 0.72% or 41.5 centavos from its end-2024 close of P57.845.
OVERSHADOWED BY TARIFFSAnalysts said the negative investor sentiment arising from concerns over the global economy may cloud Topline’s stock market debut on Tuesday.
Topline will be listed on main board of the PSE with the stock symbol “TOP.” The company will be a part of the industrial sector, under the electricity, energy, power, and water subsector.
“The listing comes in the midst of major volatility in the stock market, so we have to hand it to the owners for their determination to see this through,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“Unfortunately, the IPO is being overshadowed by tariffs and trade wars,” he added.
COL Financial Group, Inc. Chief Equity Strategist April Lynn C. Lee-Tan said in a Viber message that the negative investor sentiment could drag shares of Topline on its first trading day.
“At least they were able to raise some money,” she said.
Topline set its final IPO price at 31 centavos per share, lower than the maximum offer price of 38 centavos previously projected.
The company’s IPO was initially sized at P3.16 billion, but was reduced to P900 million and subsequently lowered to P732.62 million after the final offer price was set.
The IPO comprised of 2.36 billion shares, with a base offer of 2.15 billion primary common shares with an overallotment option of up to 214.84 million secondary common shares.
The PSE is targeting to have six IPOs this year. Some companies that are planning their IPOs include mobile wallet platform GCash and Pangilinan-led water provider Maynilad Water Services, Inc.
TARIFF ‘MEDICINE’Speaking to reporters aboard Air Force One on Sunday, Mr. Trump indicated he was not concerned about losses that have wiped out trillions of dollars in value from world stock markets.
“I don’t want anything to go down. But sometimes you have to take medicine to fix something,” he said as he returned from a weekend of golf in Florida.
Mr. Trump said he had spoken to leaders from Europe and Asia over the weekend, who hope to convince him to lower tariffs as high as 50% due to take effect this week.
“They are coming to the table. They want to talk but there’s no talk unless they pay us a lot of money on a yearly basis,” Mr. Trump said.
Mr. Trump’s barrage of tariffs announced last week was met with bewildered condemnation from other leaders and triggered retaliatory levies from China, the world’s No. 2 economy.
Billionaire fund manager Bill Ackman, who endorsed Mr. Trump’s run for president, called for the tariffs to be paused to avert an “economic nuclear winter.” “The president is losing the confidence of business leaders around the globe,” he added.
Investors and political leaders have struggled to determine whether Mr. Trump’s tariffs are part of a permanent new regime or a negotiating tactic to win concessions from other countries.
On Sunday talk shows, Mr. Trump’s top economic advisers sought to portray the tariffs as a savvy repositioning of the US in the global trade order.
Treasury Secretary Scott Bessent said more than 50 nations had started negotiations with the US since last Wednesday’s announcement. Commerce Secretary Howard Lutnick said the tariffs would remain in place “for days and weeks.”
Prime Minister Shigeru Ishiba of Japan, one of Washington’s closest allies in Asia, is also trying to cut a deal with Mr. Trump but told parliament on Monday that it may take time.
Investors are now wagering on the mounting risk of recession. They could see the US Federal Reserve cutting rates as early as next month.
White House economic adviser Kevin Hassett sought to tamp down concerns that the tariffs were part of a strategy to pressure the central bank to lower interest rates, saying there would be no “political coercion.”
Fed chief Jerome H. Powell has indicated he is in no rush to take action.
JPMorgan economists now estimate the tariffs will see full-year US gross domestic product (GDP) decline by 0.3%, down from an earlier estimate of 1.3% growth.
Meanwhile, Goldman Sachs said the tariffs could lower GDP growth in China by at least 0.7% percentage point this year. It currently anticipates China to record 4.5% growth in 2025.
US customs agents began collecting Mr. Trump’s unilateral 10% tariff on all imports from many countries on Saturday. Higher “reciprocal” tariff rates of 11% to 50% on individual countries are due to take effect on Wednesday at 12:01 a.m. EDT (4:01 a.m. GMT). — with Reuters
