Asian stock markets plunged yesterday with Malaysia down 9.5 percent and the Philippines four percent on top of the three percent drop last Friday. The peso skidded to 41.20 to the US dollar and ended at 41.14 from 40.85 last Friday.

The total value of transactions at the Philippine Dealing System reached $759.65 million.

New evidence that the US is in recession roiled the markets. Malaysian stocks plunged 9.5 percent on Monday after the ruling coalition’s shock election setback on Saturday, sending blue chips like Sime Darby and Tenaga Nasional plummeting 15 percent.

Trading in Kuala Lumpur was suspended for an hour after losses topped 10 percent in mid-session to trigger a trading halt rule designed to prevent panic selling.

"Other than Vietnam, the rest of Southeast Asia also ended lower on Monday, plagued by further evidence that the US economy has entered a recession.

Singapore’s benchmark index fell 1.04 percent, while Bangkok’s composite index finished 1.82 percent lower. Jakarta stocks also declined 4.84 percent and the Philippines index was off 3.96 percent.

Elsewhere in the region, banks took high spots on the losers’ tables, with the Bank of the Philippine Islands sliding 5.7 percent and Bangkok Bank losing 2.3 percent.

Bucking the trend, Vietnamese shares were up 2.84 percent, extending gains for a third day after the country’s central bank widened the currency’s trading band to tame inflation and restore investor confidence.

The Philippine Stock Exchange index lost 119.85 points to 2,908.88, for a 4 percent decline.

Trading turnover was at 1.04 billion shares worth P3.43 billion.

Losers overwhelmed gainers 9 gainers to 122 losers while 17 stocks were unchanged.

The Dow Jones Industrial Index on Friday shed 146.70 points after a reported increase in weekly unemployment report for the last week of February which, coupled with the effect of a spiraling oil price, has caused a more articulated fear that the US economy is in recession.

JP Morgan this weekend also conceded that the US economy is already two months in recession and the debate now is whether this recession would be a short-term decline or not.

Grace Cerdenia, 2tradeasia.com chief operating officer, said the local market sentiment continue to be influenced by US recession concerns and the increase in unemployment and inflation only heightened the concern.

"It’s really a reacting market. Inflation is the enemy of employment and in the event of a high inflation, there is no choice except to lay-off," said Cerdenia

Cerdenia said that the problem of inflation also leaves fiscal interventions limited with the threat of "a sizeable rally on inflation."

"Things are correcting itself but all hopes are not lost," according to Cerdenia who added that the recent favorable environment has helped companies strengthen its financial base "prepaying high-yielding loans" due to a tame lending environment .

Cerdenia said the question now is how companies can "increase sales margin in the light of the depressing spending environment" as a result of the US recession.

Philippine Long Distance Telephone Co. shed P115 to P2,730.

Ayala Land shed P0.75 to P10.25.

Mother company Ayala Corp. shed P3 to P50.

SM Prime Holdings Inc. lost P0.70 to P7.90.

Foreign funds were net seller of P810.19 million.

Meanwhile the South Korean won and the Indian rupee both fell to multi-month lows on Monday to lead most Asian currencies lower after weak jobs data increased US recession concerns and spurred investors to dodge risky bets.

Both the Korean won and the Indonesian rupiah fell around 1 percent each. The won hit a 17-month low while the Indian rupee fell by half a percent to its lowest in 6 months.

The Malaysian ringgit hit a two-week low, coming under additional pressure after the country’s ruling coalition suffered the biggest election setback in its history over the weekend, raising the spectre of political uncertainty.