Collapse of US banks weighs on stock market; Peso climbs

STOCKS fell for a third day even as the US tried to soothe concerns about the financial sector following the closure of two banks over the weekend.

The PSE index, the 30-company benchmark of the Philippine Stock Exchange, tumbled 45 points, or 0.69 percent, to close at 6,544.45 Monday, as four of the six subsectors registered losses. It was also down 0.33 percent since the start of this year’s trading.

The index, encompassing all shares, also shed 21 points, or 0.61 percent, to settle at 3,518.83 on a value turnover of P25.52 billion. Losers outmatched gainers, 124 to 58, while 47 issues were unchanged.

Only one of the 10 most active stocks ended in the green. Robinsons Land Corp. gained 2.42 percent to P14.40.

SM Prime Holdings Inc. and SM Investments Corp. closed flat, while the rest lost value.

The peso closed higher at 54.93 against the US dollar Monday, compared to 55.17 on Friday, on expectations the Bangko Sentral ng Pilipinas would remain hawkish to contain inflation. Higher local interest rates tend to attract investors looking for increased yields.

The collapse Friday of Silicon Valley Bank, which specialized in venture-capital financing largely in the tech sector, came after a huge run on deposits left it unable to stay afloat on its own.

That came in response to its announcement of a stock offering and sale of securities to raise much-needed cash. Its shares collapsed 60 percent in New York on Thursday and trading was sus- pended Friday morning, before regulators said they had closed it down.

SVB is the largest retail bank to fail since the 2008 financial crisis.

Its problems had built up as the US Federal Reserve’s interest rate hikes meant securities it owned were selling for significantly less—a problem other banks could face.

On Sunday, New York regulators said they had closed another lender, Signature Bank.

The crisis forced the Fed, the Treasury Department and Federal Deposit Insurance Corp. to promise to fully protect all depositors and give backup to any lenders struggling to find cash, providing easier terms on short-term loans.

In a joint statement, they said SVB depositors would have access to “all of their money” starting Monday, March 13, and that taxpayers will not have to foot the bill. With AFP