Coronavirus Prompts The Philippines To Shut Markets
The Philippines paused stock, bond and currency trading until further notice, becoming the first country to shut financial markets due to the coronavirus pandemic.
The Philippine closure takes effect Tuesday, according to the nation’s stock exchange and the Bankers Association of the Philippines. Speculation that other countries may follow suit has built up, as stocks around the world plunged on fears of a global recession.
«This restricts exit the mechanism so it won’t be taken kindly by investors who don’t like their flow of funds constrained. What the market would do when trading resumes depends on the state of global markets. We will see a sharp selloff if the global weakness continues and a sharp rebound should there be a recovery worldwide.» said Manny Cruz, strategist at Papa Securities, who was quoted in «Bloomberg»(behind paywall).
Month-Long Lockdown
The trading halts follow President Rodrigo Duterte’s decision on Monday to widen a month-long lockdown of the capital region to cover the country’s main Luzon island, home to at least 57 million people. The virus has infected at least 140 people in the Philippines and killed a dozen.
Philippine equities have lost more than 30 percent this year, among the biggest declines in Asia. A U.S.-listed exchange-traded fund that tracks the Philippine market sank by a record 19.5 percent on Monday after the bourse announced it was shutting.
Shutting markets during times of crisis is very rare but not without precedent. The U.S. stock market closed for almost a week after the September-11 terrorist attacks in 2001, while Hong Kong halted trading in the wake of the Black Monday crash in 1987. Greece shut its stock market for about five weeks in 2015.
