First of all I don’t think today’s 4% massacre of the Phisix which was a vicious blue chip selling was mostly about Lehman.
I suspect this to be more of AIG-driven.
Look at today’s news from CBS,
``Friday, the firm said it was reviewing its operations and that "everything was on the table," suggesting it might sell assets to raise capital and avoid a crippling downgrade. Standard & Poor's said it might cut its rating if AIG didn't take steps to shore up its business.
``Aside from potential asset sales, AIG is also seeking to raise more than $10 billion in capital, the Journal said. AIG has already raised about $20 billion in 2008.
``AIG shares slumped a record 31% Friday on concern the world's largest insurer may be downgraded by ratings agencies, triggering billions of dollars in new capital needs.
``Standard & Poor's put AIG's ratings on CreditWatch with negative implications, suggesting the agency may downgrade the insurer in the future.
``"Additional market value losses will place some strain on the company's resources," Standard & Poor's credit analyst Rodney Clark said in a statement. "AIG's potential access to the capital market may be more restricted in the short term."
One, compared to Lehman, AIG has direct exposure to the Philippines, which means any emergency fund raising from the mother unit would most likely involve directing its offshore treasury units to sell its most liquid holdings elsewhere (including the Philippines).
Second it’s all about timing. The news says AIG’s declaration to “sell assets to raise capital” was announced Friday. The amount of foreign selling today (Php 840 million) was almost to the same degree from last Friday (Php 749 million). But today’s action reflected more of the urgency to exit which almost falls squarely with sentiment reflected in the news report.
Of course this is just a suspicion.
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