Black Thursday in the PSE: 13% Decline and other Biggest Stock Losses

For newbie stock traders who lack years of experience investing in stocks, a huge drop in the level of the Philippine Stock Exchange index (PSEi) is no doubt terrifying.

Imagine the PSEi dropping by 13% in just a single day! This means if you have P100,000 invested in stocks yesterday, your portfolio lost a whopping P13,000 — in just one day! — making your money worth just P87,000 today.

Black Thursday in the PSE: Down 13.34% on March 19, 2020

Guess what, that actually happened on March 19, 2020 when the PSEi plunged an unprecedented 13.34%!

On this day, the PSEi closed at 4,623.42 points as investors went on full selling mode as the government announced a Luzon-wide lockdown restricting movement of citizens and temporary closure of some business operations. The move was intended to curb the spread of COVID-19 in the Philippines.

At the market opening that Thursday, stock prices immediately plunged by 12.4%, causing the PSE to implement a 15-minute trading halt.

When trading resumed, however, traders continued unloading stocks and the index crashed to reach an abysmal 4,039.15 points –a record-breaking decline of 24% intra-day — before recovering later in the day but closed still down 13.34% from the previous trading day.

This day of huge losses is now marked as “Black Thursday” in the history of the PSE because of the massive sell-down of Philippine stocks.

Price drops in the stock market are not entirely new, but losses of this magnitude is certainly scary for investors who have not yet experienced the complete cycle of boom and bust in the PSE. (See also: Why People Lose Money in Stocks: The Emotional Cycle of Investing)

Let’s revisit the days when Philippine stocks recorded huge one-day price losses.


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Biggest 1-Day Losses of Philippine Stocks

PSE Loss of -3.86% on February 26, 2020

After hovering above the 7,000 level for several months, the PSEi finally broke the 7,000 support level and closed at 6,909.94 — down 3.86%, the biggest one-day loss since 2016.

Philippine stocks trailed global markets, especially US stock markets, which have been taking a beating due to escalating concerns that the Wuhan coronavirus (COVID-2019) could worsen and become a global pandemic, consequently impacting the global economy.

At risk are companies spanning various industries. For one, profitability of tourism and airline companies are heavily impacted by COVID-19, brought about by cancellations of flights and vacation plans by tourists.

Consumer companies are also feeling the brunt as customers prefer to just stay at home, instead of shopping or dining out.

Meanwhile, companies reliant on Chinese manufacturers are experiencing supply chain disruptions which could lead to production delays.

The World Health Organization (WHO) reported that the epidemic has peaked in China but unfortunately is spreading faster than expected in other countries, including South Korea, Japan, and the United States.

As of February 2020, the WHO has tallied more than 83,000 confirmed coronavirus cases, with at least 2,800 deaths due to COVID-2019.

By November 2020, however, the tally has reached more than 60 million total COVID-19 cases worldwide with 1.4 million deaths.

PSE Loss of -2.58% on February 28, 2020

Philippine stocks continued their downtrend in the aftermath of the coronavirus global scare. On February 28, 2020, the PSEi dropped by another 2.58% closing at 6,787.91 points.

Year-to-date, that is, from January 2020 to February 2020, Philippine stocks are already down 13.15%.

PSE Loss of -4.37% on January 11, 2016

External negative developments caused a 4.37% one-day decline in Philippine stocks, with the PSEi closing at 6,288.26 points.

Analysts point to growing concerns that China’s boom has peaked as seen in the country’s declining GDP growth rates. China’s weak economy is also seen to affect the demand for oil, subsequently causing a decline in prices with fears that the oil price downtrend could continue unabated in the coming months.

PSE Loss of -12.27% on October 27, 2008

Philippine stocks recorded the second biggest one-day price drop in recent history on October 27, 2008 — falling by a whopping 12.27% in the aftermath of the bankruptcy filing of investment bank Lehman Brothers (see also: Why AIG was bailed out but not Lehman Brothers).

The steep drop was also caused by negative overall market sentiment and global sell-offs since the United States was also in the middle of its subprime mortgage crisis during this time. On this day, the PSEi closed at a low of 1,713.83 points.

PSE Loss of -2.14% on March 20, 2018

The PSEi again dropped massively, shedding 175.94 points to end at an index level of 8,059.60. This represented a 2.14% price decline from the previous trading day.

Philippine stocks tracked U.S. equity markets which also suffered from a slump the night before, with the Dow Jones closing at 24,610.91 points, down 1.35%, and the NASDAQ closing at 7,344.242 points, down 1.84%. U.S. stocks declined following reports that U.S. President Donald Trump is planning to impose tariffs on imports from China and restrictions on Chinese investments in the U.S.

PSE Loss of -2.42% on January 31, 2018

The PSEi fell more than 200 points and recorded a huge intraday loss of 2.42%. This after several days of price surges with the PSEi settling above 9,000 points. Stock prices, however, recovered before the day’s close, but the index still ended today with a price loss of -1.64% compared to the previous day’s ending level of 9,058.62.

PSE Loss of -6.70% on August 24, 2015

The index settled at 6,791.01 points, a sharp one-day fall of 6.7%. More than 212 stocks declined in value versus only 13 that managed to record a price increase.

The primary culprit is said to be concerns about China, especially its declining growth rate. Weak manufacturing output signaled that China’s GDP growth is falling faster than expectations.

At the same time, sell-offs in China’s stock markets fueled concerns about market volatility. The Shanghai stock market, for instance, has fallen since its peak in June 2015 — with 30% of the value being wiped out in just 3 months.

PSE Loss of of -5.96% on August 22, 2013

Philippine stocks declined by a huge 5.96% after a report of the Federal Open Market Committee (FOMC) of the US Federal Reserve was released showing that majority of the Fed members support the termination of the Quantitative Easing (QE3) program. (Read: What is Quantitative Easing or QE3?)

PSE Loss of -6.75% on June 13, 2013

Huge outflow in foreign funds contributed to a sharp 6.75% one-day decline of the PSE on June 13, 2013. On this day, the PSEi closed at 6,114.08.

Foreign investment funds were being siphoned away from emerging markets, such as the Philippines, back to developed economies after the US Federal Reserve announced it will soon end the Quantitative Easing (QE3) liquidity infusion program. (Read: What is Quantitative Easing or QE3?)

PSE Loss of -5.13% on September 23, 2011

Philippine stocks dropped a huge 5.13% on September 23, 2011 due to lingering concerns on a possible global recession, highlighted by fears that some countries in Europe are bailing out and could default on their sovereign loans. The PSEi, on this day, closed the days trading at 3,885.96 points.

PSE Loss of -4.02% on August 9, 2011

Standard & Poor’s downgraded the United States’ credit rating, sparking a 4.3% drop in the Dow Jones and a 5% drop in Nasdaq on the same day.

Hours later, Philippine stocks followed suit, recording a 4.02% sell-off among stocks in the PSE index. (Read: Impact of the US Credit Rating downgrade by S&P)

PSE Loss of -3.97% on May 23, 2006

On May 23, 2006 the PSEi fell by 3.97%. Absent any major external or local economic issue, the sell-off was blamed on fears that foreign funds (“hot money”) invested in the country may leave due to rising interest rates in the US.

Market crashes and stock price meltdowns are a regular part of any stock market. Our hope is that Filipino investors have become mature and smart enough to go with the cycle.

Losses are common and to be expected when investing in stocks. If you have the guts and willingness to take on these risks, continue trading stocks and enjoy the whirlwind ride! Happy investing!

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3 thoughts on “Black Thursday in the PSE: 13% Decline and other Biggest Stock Losses”

  1. March 19, 2020 is now the worst ever sell of in PSE HISTORY and we shall forever remember and engrave it in history as the BLACK THURSDAY wherein the aftermath of 2 day closure of trading in pse happened!

    PSEi suffered a WHOPPING -24% intraday loss before recovering when buyers started shopping at 4000 level of index and closed the day at -13% which was still 1% worse than the LEHMAN BROTHERS COLLAPSE back in 2008!!

    During march 16 a total lockdown in luzon was implemented due to the exponential infection rate of COVID-19 pandemic and PSE was forced to shut down for 2 days, march 17 and march 18. But during those 2 days of closure global markets were also collapsing so its only natural that pse would follow the global trend once it opens again, foreigners also got very angry when they felt like philippines was freezing their cash in the market so when the trading opened again in march 19, we saw a massive sell off like no other as foreigners HASTILY PUSHED EACH OTHER TO RUN FOR THE EXITS coupled with very thin liquidity in bid side as all bids were cancelled due to the closure!!

    What a day march 19 2020 forever in our heads -24% intraday loss for the pse index nobody has ever thought that we would see this in our lifetimes!!!

    Reply
  2. Though I wonder if ever a worse than -24% intraday loss has ever happened during asian financial crisis or during the edsa 1 collapse, i cant seem to find any data online about it. For the oldies out there do you guys remember anything worse than this march 19 2020 collapse?

    Reply

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