Philippine stocks are poised to extend the longest losing streak since March and the peso may weaken after Super Typhoon Haiyan killed an estimated 10,000 people and flooded islands, according to BDO Unibank Inc.
“The typhoon will have a negative impact on both the peso and stocks,” Jonathan Ravelas, the chief market strategist at Manila-based BDO Unibank, the nation’s largest lender, said yesterday. “This will be a big expense for the government and the damage we have seen from reports will impact growth.”
The year’s most powerful cyclone knocked down buildings, damaged crops and destroyed an airport. Though the government was still assessing the cost of the disaster yesterday, the economic impact may reach $14 billion, about $2 billion of which will be insured, Jonathan Adams, a senior analyst at Bloomberg Industries, wrote in a report citing Kinetic Analysis Corp.
The Philippine Stock Exchange Index (PCOMP) has dropped for six straight days to the lowest level since Oct. 1, as investors anticipated the storm and weighed the likelihood that the U.S. Federal Reserve will reduce bond purchases that have spurred gains in emerging-market assets. The gauge is up 9.3 percent this year.
The peso was little changed against the dollar last week, leaving it 5.1 percent weaker versus the U.S. currency this year.
Companies that sell discretionary consumer goods may get hurt most as Filipinos limit their purchases to basics following the typhoon, according to Alex Pomento, a Manila-based strategist at Macquarie Group Ltd.
“Spending will focus on essentials,” he said in an interview yesterday.
Cement and construction-related shares will benefit as the country looks to rebuild power, transport and communication networks, Pomento said. Holcim Philippines Inc. (HLCM), the nation’s biggest listed cement company by market value, has gained 0.9 percent in Manila trading this year, while smaller rival Lafarge Republic Inc. (LRI) dropped 21 percent. Megawide Construction Corp. (MWIDE) has retreated 25 percent.
Reconstruction efforts helped boost economic growth following previous natural disasters, central bank Governor Amando Tetangco said in an e-mailed reply to questions from Bloomberg News. Both monetary and fiscal policies can be adjusted to respond to changes in the economy caused by the disaster, he said.
The Philippines made no announcement that financial markets would be closed following the typhoon. Manila, the nation’s financial hub, was outside the main path of the storm.
Robinsons Retail Holdings Inc. (RRHI), the operator of supermarkets and department stores controlled by billionaire John Gokongwei, is due to start trading today after raising at least $621 million in the country’s biggest initial public offering.
Haiyan killed as many as 10,000 people in and around Tacloban City, the capital of Leyte province, when it made landfall Nov. 8, the Associated Press reported yesterday, citing regional police chief Elmer Soria.
An additional 300 fatalities were confirmed on nearby Samar island and 2,000 others were missing, the AP cited Leo Dacaynos of Samar province’s disaster office as saying. More than 9 million Filipinos were affected by the storm, the government said.
The Philippines was the nation most impacted by natural disasters in 2012, with more than 2,000 deaths, according to the Brussels-based Centre for Research on the Epidemiology of Disasters. On Oct. 15, 222 people were killed in Visayas after a 7.2-magnitude earthquake.
“Both stocks and the peso are already weak,” Ravelas said. “This is another nudge to push bulls off the cliff.”
To contact the reporter on this story: Ian Sayson in Manila at firstname.lastname@example.org