Philippine Stocks Drop With Peso on Typhoon Haiyan Devastation

Philippine stocks retreated, with the benchmark index falling the most in six weeks, amid concern the devastation from Super Typhoon Haiyan will weigh on economic growth. The peso declined to a five-week low.

The Philippine Stock Exchange Index slid 1.4 percent to 6,265.23 at the close in Manila, the steepest drop since Sept. 30. The peso weakened 0.9 percent to 43.580 per dollar, the sharpest loss since Aug. 22. The yield on the 11.375 percent local-currency government bonds due Oct. 2023 climbed 12 basis points to 3.65 percent, according to noon fixing prices from the Philippine Dealing Exchange Corp.

The year’s most powerful cyclone may have killed as many as 10,000 people as it flattened buildings and caused flooding. The economic impact may reach $14 billion, about $2 billion of which will be insured, Jonathan Adams, an analyst at Bloomberg Industries, wrote in a report citing Kinetic Analysis Corp.

“There are concerns economic momentum will slowdown as the series of catastrophes could entail substantial reconstruction costs,” said Jonathan Ravelas, the chief market strategist at Manila-based BDO Unibank, the nation’s largest lender. “This will be a big expense for the government and the damage we have seen from reports will impact growth.”

Rice and sugar-cane harvests were damaged by Super Typhoon Haiyan. While Eastern Visayas, the hardest hit area, accounts for only five percent of national rice output, shortages may strain inventories, according to the International Rice Research Institute. As many as 120,000 tons of sugar may have been lost, the Sugar Regulatory Administration estimated.

Death Toll

While the official death toll posted by the National Disaster Risk Reduction and Management Council was 229 as of 7 p.m. yesterday, the number was expected to rise as the government received reports from provinces still out of reach, Major Rey Balido, spokesman of the disaster-monitoring agency, said in a text message. Almost 9.5 million Filipinos, or about 9 percent of the population, were affected, the agency said.

The difficulty in reaching the hardest-hit areas means the number of dead has yet to be confirmed, according to the Red Cross in Geneva, which cited Philippine authorities as saying the toll may reach 10,000.

The prospect of reduced Federal Reserve stimulus is also weighing on markets, said Jerome Gonzalez, the Manila-based head of research at Philequity Management Inc., which oversees about $230 million.

Fed Impact

Speculation that the Fed by pare back its bond-purchase program increased after figures on Nov. 8 showed employers in the U.S. added 204,000 workers last month, topping the median forecast of 120,000 in a Bloomberg survey of economists. The MSCI Asia Pacific excluding Japan Index declined 0.5 percent.

Robinsons Retail Holdings Inc., the largest Philippine initial public offering in dollar terms, retreated in its Manila debut today. The operator of supermarkets and department stores fell 2.6 percent to 56.50 pesos, after raising at least $621 million from investors.

“Negative sentiment is hanging over the market,” Bach Johann Sebastian, a senior vice president at Robinsons, said at the bourse today. “We expect the share price to improve as the company expands and delivers on its promise.”

Energy Development Corp., the nation’s largest geothermal power producer, slumped 9.9 percent to 5.10 pesos, the sharpest loss since March 1, as the company said cooling towers at three of its plants sustained damage from the typhoon.

Bank of the Philippine Islands, the biggest listed lender by market value, slid 3.6 percent to a ten-week low. LT Group Inc., owner of the nation’s largest cigarette manufacturer and biggest rum-maker, fell to the lowest close since Jan. 30.

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