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Philippines: Inflation, peso worries batter stock market
MANILA, Philippines — A change in government yesterday failed to excite the stock market as scorching inflation, a weakening peso, and prospects of bigger rate hikes continue to send jitters to investors.
The benchmark Philippine Stock Exchange index (PSEi) ended at 6,155.43, down 147.76 points or 2.34 percent, to stumble further in the red yesterday.
The broader All Shares index likewise slipped 52.89 points or 1.56 percent to close at 3,336.23.
The sectoral gauges were mostly down except for mining and oil and industrial.
Total value turnover reached P6.4 billion. Market breadth was negative, 117 to 71, while 47 issues were unchanged.
Claire Alviar, research analyst at PhilStocks Financial Inc. said the market declined amid a lack of positive catalysts at home, coupled with a higher inflation rate expectation for June.
The Bangko Sentral ng Pilipinas projects the inflation rate in June to settle within 5.7 to 6.5 percent, higher than May’s 5.4 percent and the government’s target of two to four percent.
“This weighed heavily on sentiment as consumers’ purchasing power is anticipated to weaken. Moreover, the second-round effects are also expected which may further push the inflation upward in the coming months,” Alviar said.
Moreover, the possibility that the BSP may increase the interest rate higher than the planned 25 basis points also affected sentiment as it is seen to slow down economic growth.
Around Asia, emerging markets also suffered heavy losses as policy tightening by the US central bank and concerns over global economic outlook spurred selling in Asian assets.
Emerging markets in the six month period were battered by capital outflows due to the US Federal Reserve kicking off its tightening cycle, Russia’s invasion of Ukraine, and inflation from higher commodity prices.
Fed Chair Jerome Powell said overnight there was a risk that the planned policy tightening might slow down the economy too much, as he reaffirmed the central bank’s commitment to fight inflation.
Source: https://www.philstar.com/business/2022/07/01/2192100/inflation-peso-worries-batter-stock-market