PSE temporarily halts trading as stocks suffer heavy losses

MANILA, Philippines - For the first time in the 81-year existence of stock trading in the country, the Philippine Stock Exchange on Monday has temporarily halted the session in a bid to calm the frantic sell-off in local shares, which sent the main index falling by more than a tenth of its value.

In a telephone interview Francis Ed. Lim, PSE president and chief executive officer, told GMANews.TV that the PSE has imposed the 15-minute circuit breaker rule from 11:23 a.m. to 11:38 a.m. as the bourse's bellwether Philippine Stock Exchange index plunged 220.70 points or 11.3 percent.

"It's a sad day for us but this is not surprising. We're suffering as much as the rest of the world and this is not caused by internal matters," he said.

Lim added that the PSE resumed trading a few minutes before 12 noon.

"We want to remain market-oriented," he said.

The PSE announced late last month that the circuit breaker rule is aimed at giving more time to investors to “digest the impact of a sudden and unusual market drop and to help restore normalcy to the stock market".

The trading halt will be implemented only once in a trading day and will not be resorted to if the drop occurs 30 minutes or less prior to the market close.

Trading at the PSE opens at 9:00 a.m. and closes at 12:10 noon.

Lim earlier said circuit breakers are utilized by some exchanges to prevent investor panic.

"The problem with panic selling is that investors are selling out of pure emotion rather than based on fundamentals. Almost every market crash is a result of panic selling," Lim had said.

The PSE said that other exchanges which have already adopted a similar rule include the New York Stock Exchange, Nasdaq Composite, and Asian bourses such as Malaysia and Thailand, and developed stock markets in South Korea and Taiwan.

On Friday the Dow Jones industrial average fell 312.30, or 3.59 percent, to 8,378.95. However, stock index futures indicated a moderately higher open, with Dow futures climbing 34, or 0.41 percent, to 8,295. Standard & Poor's 500 futures and Nasdaq-100 futures were also higher.

Astro del Castillo, managing director at First Grade Holdings, noted that investors' sentiment was "really bad"

"This is a marathon, looking for a cure. No one can't stop this fall," he said.

Del Castillo added that for the rest of the week, until investors are convinced that the global economy is on its way to recovery, local stocks will be "on a roller-coaster ride with a downward bias." Source