Philippines to Reimpose Lockdown in Capital; Stocks Plunge
(Bloomberg) -- The Philippines will place its capital region under a strict lockdown from Aug. 6 to Aug. 20 and implement additional movement restrictions in the interim to stem the spread of the coronavirus’ delta variant. Stocks fell the most in six months.
The Manila capital region, which accounts for about a third of the economy, will shift to the strictest restriction called enhanced community quarantine to avoid overwhelming hospitals, presidential spokesman Harry Roque said on Friday. Most businesses will be shut, and only essential shops like supermarkets and pharmacies can fully operate while restaurants will only be open for take out and deliveries.
“This is a painful decision, and we know how difficult this is, but we have to do it to prevent a shortage in beds in intensive care units,” Roque said. The latest decision came two days after government announced it kept restrictions unchanged in the capital until the middle of August.
Each week of the strictest lockdown in Metro Manila will cost the economy 105 billion pesos ($2.1 billion) and jack up the number of unemployed individuals by 444,000, Economic Planning Secretary Karl Chua said. The economic impact will be reversed if the time on lockdown is used to accelerate vaccination, he said.
The last time the capital region was under enhanced quarantine was in April after cases rose to a record.
“This move looks more draconian and goes straight to the most stringent measures and hence is a bit of a surprise,” said Euben Paracuelles, chief Asean economist at Nomura Holdings Inc. in Singapore. “This is consistent with our view that the recovery will lag far behind the region as vaccination is among the slowest and hence leaving the country susceptible to rolling Covid-19 waves and recurring lockdowns,” he said.
Among Asia’s worst outbreaks, the Philippines has recently seen an uptrend in infections in most cities in the capital after weeks of decrease, prompting local government leaders to push for a lockdown. Cases rose 5,735 Thursday to 1.57 million, with deaths rising 176 to 27,577. Half of the capital’s ICU beds are utilized and 59% for the entire Philippines, according to health department.
The government also extended its travel ban on 10 countries to Aug. 15, Roque said. Only authorized persons will be allowed to go in and out of the capital region and surrounding provinces. Personal care services like beauty salons will be allowed at 30% capacity. Religious events aren’t allowed, except those held virtually.
The Philippines’ benchmark stock index plunged a world-beating 3.5% to 6,270.23 at the 1 p.m. close, also its steepest loss in six months. Companies that stand to gain more from further opening of the economy led declines with San Miguel Corp., nation’s biggest food and drinks company, sinking 8% while Ayala Land Inc., one of the country’s biggest mall developers, slumped 7%.
“This lockdown is necessary,” said Claire Alviar, an analyst at Philstocks Financial Inc. “It’s best to impose a lockdown now rather when the situation has worsened. But it’s negative for stocks because it would mean more revenue loss.”
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