How the U.S. stocks slump can affect PH market

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Metro Manila (CNN Philippines, February 6) — Expect the plunge in U.S. stocks to have a "ripple effect" on other markets, including the Philippines, an official of the Philippine Stock Exchange (PSE) said Tuesday.

"When the big markets react that way, the emerging markets as well will also experience the same effect," PSE Chief Operating Officer and Senior Vice President Roel Refran told CNN Philippines. "If you're a retail investor definitely you'll probably take your signal on what's happening in the U.S."

 

Stocks went into free fall in the U.S. on Monday (Tuesday morning in the Philippines), with the Dow suffering its worst closing point in history at 1,175 points. It was a 4.6 percent drop, the biggest decline since August 2011.

It has had its impact on Asia, with Japans' Nikkei Index also plunging 4 percent on Tuesday morning.

Refran, however, said he is seeing a stable Philippine market so far.

"We are still, I would say, very much fundamentally firm - and not just because of our position in the equities market but also the underlying economy," he explained.

On January 26, the PSE index breached the 9,000 mark, gaining 42.03 points or 0.5 percent from the previous day to close at to close at 9,041.20.

Since the start of the year, the PSEi has reached new record highs eight times.

READ: Palace: PH economy on a roll as PSEi hits all-time high

Refran said a statement of the Bangko Sentral ng Pilipinas (BSP) that interest rates will remain steady should also allay investors' fears.

"I think the certainty as well as the clarity in terms of the policy from the central bank and the national government would help ease concerns being experienced by foreign and local investors," he said.

As for the fall in U.S. stocks, Refran said this is just the start of the year and the market can improve later on.  In a statement, the White House said "markets do fluctuate in the short term," and stressed that the U.S. economy remains strong.