PH shares fall on BSP chief’s hawkish comments

Philippine stocks declined further on Wednesday due to hawkish comments from the Bangko Sentral ng Pilipinas (BSP) chief.

The Philippine Stock Exchange index (PSEi) fell by 32.76 points or 0.52% to 6,179.63 on Wednesday, while the broader all shares index went down by 13.32 points or 0.4% to 3,339.63.

“Shares on the Philippine Stock Exchange held a tight range before dropping at the close as Philippine central bank Governor Eli Remolona doubled down on his hawkish rhetoric as inflation remains a worry, while still gloomy factory readings from Japan left sentiment fragile,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“While Remolona extended the pause for a third straight meeting in his first rate decision as governor last week, he kept the door ajar for further monetary tightening as higher fuel and rice prices along with a weaker currency threaten to reignite inflation,” Mr. Colet added.

BSP Governor Eli M. Remolona, Jr. on Tuesday said the central bank’s stance remains hawkish and rate cuts are not on its radar as inflation is still elevated.

The Monetary Board last week kept benchmark interest rates steady for a third straight meeting, but said it is prepared to resume tightening if needed amid risks to inflation.

The BSP left its overnight reverse repurchase rate unchanged at a near 16-year high of 6.25%. Interest rates on the overnight deposit and lending facilities were maintained at 5.75% and 6.75%, respectively.

The central bank raised borrowing costs by 425 basis points from May 2022 to March 2023 to tame inflation.

The BSP will hold its next policy meeting on Sept. 21.

“The local bourse extended its decline… as the sentiment was further dragged by the expectation of the Bangko Sentral ng Pilipinas that our country may miss the economic growth target of 6-7% due to the ongoing economic headwinds coupled with the impact of its monetary tightening,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar added in a Viber message.

The central bank said in its August monetary policy report that the Philippines may not be able to hit the government’s economic growth targets for 2023, 2024, and 2025.

Sectoral indices were split on Wednesday. Industrials climbed by 49.77 points or 0.57% to 8,714.78; holding firms went up by 7.87 points or 0.13% to 5,840.53; and mining and oil increased by 39.37 points or 0.4% to 9,849.01.

Meanwhile, financials dropped by 39.81 points or 2.12% to 1,830.66; property declined by 22.80 points or 0.87% to 2,586.12; and services went down by 2.58 points or 0.17% to 1,514.86.

Value turnover dropped PHP 3.62 billion on Wednesday with 347.47 million shares changing hands from the PHP 4.79 billion with 391.66 million shares seen on Tuesday.

Decliners outnumbered advancers, 107 versus 64, while 46 names closed unchanged.

Net foreign selling increased to PHP 508.57 million on Wednesday from the PHP 264.81 million on Tuesday. — S.J. Talavera