PSE index may go down to 6,500-level

Carlo Lorenciana

THE ripple effects of the coronavirus disease outbreak have reached across industries, with the airline and tourism sectors likely to take the biggest hit.

Shares in Cebu Air Inc. and PAL Holdings, the country’s two biggest airline operators, fell 0.72 percent and 0.71 percent on Wednesday, respectively.

Fast-food giant Jollibee, which has a significant business in China and across Asia, also dropped 5.66 percent. While port operator ICTSI also tumbed 11.30 percent.

Businessman Robert Go, owner of Cebu-based Prince Retail, said the retail sector is likely to feel the brunt of the global health crisis.

The Philippine Stock Exchange (PSE) index was down 3.86 percent or 277.60 points, closing 6,909.84 on Wednesday, Feb. 26, 2020.

Marco Nino Velasco, equities investment manager at Unicapital Securities, the outlook on the market could get “even worse soon.”

“This can just be the start. The coronavirus may derail the global economy. I really suspect this is not some random outbreak,” the analyst told SunStar Cebu, even saying the crisis may drive another global recession.

“It is best to stay liquid for now. As far as the PSE is concerned, I am looking at around 6,500-level soon. Now that we’re below 7,000, sentiment may get even worse. Foreign funds are flowing out and locals are not buying yet,” Velasco pointed out.

In the Philippines, the tourism business is taking the hardest blow from the coronavirus impact.

”Tourists to and from the Philippines declined. It is expected because China gives us the most number of tourists,” he said.

The Philippines have since restricted flights to and from China. On Wednesday, the government included South Korea in its travel ban, as the East Asian country comes with the highest number of confirmed coronavirus cases outside China.

“Both the import and export sectors also are also affected. What is very alarming is the possibility that inflation rate will go up. Food supply decreased because we are importing from China,” he said. “Generally, economic activity is affected as people no longer go out decreasing trade activities,” he added.

But while certain sectors are seeing dismal growth, the medical business is looking to benefit from the outbreak scare.