PSEi drops on tightening, geopolitical concerns

The main index dropped on Monday as investors stayed on the sidelines amid concerns over potential rate hikes and geopolitical issues.

The Philippine Stock Exchange index (PSEi) declined by 7.79 points or 0.12% to end at 6,252.16 on Monday, while the broader all shares index added 0.78 points or 0.02% to 3,380.05.

“Shares on the Philippine Stock Exchange pared earlier losses but still closed in the red, as sentiment is weighed down by the likelihood of further monetary tightening after headline inflation quickened in September,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.

Headline inflation quickened to 6.1% in September from 5.3% in August, data released last week showed.

For the first nine months, the consumer price index averaged 6.6%, well above the Bangko Sentral ng Pilipinas’ (BSP) 5.8% forecast and 2-4% target for the year.

Following the data release, the BSP said it “stands ready to resume monetary policy tightening as necessary to prevent the renewed broadening of price pressures.”

The Monetary Board will hold its next policy meeting on Nov. 16.

The BSP has kept its policy rate at 6.25% for four straight meetings after it hiked borrowing costs by 425 basis points from May last year to March this year to tame inflation.

Sentiment was affected by the conflict in the Middle East, Unicapital Securities, Inc. Senior Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

“The local bourse ended in the red as investors remained on the sidelines, assessing concerns about the ongoing Middle East conflict that has erupted over the weekend. This geopolitical tension presents an upside risk to global inflation due to its potential impact on oil prices,” Mr. Temporal said.

Israel pounded the Palestinian enclave of Gaza on Sunday, killing hundreds of people in retaliation for one of the bloodiest attacks in its history when Islamist group Hamas killed 700 Israelis and abducted dozens more, Reuters reported.

At home, the majority of sectoral indices went up on Monday. Mining and oil climbed by 99.37 points or 0.91% to 10,940.66; services increased by 6.15 points or 0.4% to 1,512.15; industrials went up by 28.81 points or 0.32% to 8,911.59; and property rose by 3.76 points or 0.14% to 2,601.03.

Meanwhile, financials fell by 15.68 points or 0.85% to 1,808.87 and holding firms went down by 15.12 points or 0.25% to 5,959.36.

Value turnover went up to PHP 5.71 billion on Monday with 771.49 million shares changing hands from PHP 3.86 billion with 730.18 million shares seen on Friday.

Advancers outnumbered decliners, 94 versus 86, while 56 shares closed unchanged.

Net foreign selling rose to PHP 2.98 billion on Monday from PHP 150.99 million on Friday. — SJT with Reuters