SINGAPORE (Mar 17): While the Philippine Stock Exchange has suspended trading from Tuesday amid the Covid-19 pandemic, the Singapore Exchange (SGX) says it is committed to keeping its markets open.
The Philippines shut down its equity, currency and bond markets after Manila expanded a month-long lockdown of the capital region to contain the coronavirus outbreak.
The country is the first to halt trading, after Philippine equities tumbled more than 30% this year – among the biggest declines in Asia.
While controversial and extremely rare, the move is not without precedent.
Following the 9/11 terrorist attacks in 2001, America’s stock market closed for almost a week.
In 2015, Greece shut its stock market for about five weeks amid a government-debt crisis.
Hong Kong had also halted trading in the wake of the Black Monday crash in 1987.
The Philippines' move has prompted speculation that other countries may follow suit to stem plunging stock prices, on the back of heightened fears of a global recession.
Investors in Singapore, however, have little reason to worry at this point that financial markets here will be shutting down.
“Our priority is to ensure that our securities and derivatives markets are always available and accessible,” says an SGX spokesperson in response to questions from The Edge Singapore. “We are committed to ensuring that our trading, risk management and clearing capabilities are robust, especially in these volatile times.”
“We have taken a holistic approach to maintain a safe working environment and strengthen resiliency,” the spokesperson adds.
Even as shutting down of the stock exchange might be seen as an extreme measure, some market experts have voiced their support for the move in the Philippines.
“Think of it as a circuit breaker on steroids,” says Justin Tang, head of Asian research at United First Partners in Singapore. “The suspension will hurt those who rely on trading for an income but will provide time for participants to calm down and evaluate the situation rationally.”
“There is rampant fear at the moment as evidenced by the unprecedented volatility. The enemy is ourselves in that we are really reacting to a loss of control over the situation given that no one really knows how far this can go – just as it was on 9/11,” he adds.
Meanwhile, Jonathan Ravelas, a strategist at BDO Unibank in the Philippines, believes it is a “smart move”.
“The market is already in hysteria. Sometimes taking a step back allows investors to rethink their position and digest the flood of information out there. This is a health crisis we are facing and it seems the market reaction has been too exaggerated,” he says.
However, Ramon Monzon, the Philippine Stock Exchange’s chief executive officer, describes the closure of the capital market as “an oversight” by the government.
“If we were given the chance to articulate our position we would have requested that we don’t be included in the closure,” Monzon says. “Even if the market drops it is better to be open and have that transparency.”
