Plunge in world oil prices 'positive' for Philippines: analyst

ABS-CBN News

Posted at Apr 21 2020 09:49 AM | Updated as of Apr 21 2020 11:05 AM

A car is gassed up at a pump station in Quezon City in this file photo. US oil futures plunged below zero on April 20, 2020 as COVID-19 lockdowns force a supply glut. Mark Demayo, ABS-CBN News/file

MANILA -- The historic slump in world oil prices will be "positive" for countries like the Philippines that import most of its fuel requirements, an analyst said Tuesday.

Lower fuel costs will also provide relief to companies that are under pressure to deliver earnings during the coronavirus lockdown, said ATR Asset Management head of equities Julian Tarrobago.

"Because of the lack of demand currently, globally, we think oil prices will stay low and this benefits net oil importers such as the Philippines," Tarrobago told ANC.

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Overnight, oil futures in the US fell to negative $40 as lockdowns worldwide cut demand for fuel.

Tarrobago said investors should avoid jumping blindly, whether in fixed income or stocks that are currently at "firesale" prices.

"There's no playbook for this current crisis because this is very unique," he said.

Tarrobago said the Philippines' recovery would depend on the length of the lockdown, which would last for 2 months if it ends on April 30 as scheduled.

Low oil prices are going to stay "for quite some time," said Caylum Trading Institute President Edmund Lee.

Consumer and telecommunications stocks are the safest picks at the moment, Lee told ANC. At current levels, the market is expecting a 25 to 30 percent drop in earnings per share, he said.

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