Stocks retreat on hawkish BSP before GDP data

Philippine shares dropped on Monday following hawkish comments from the Bangko Sentral ng Pilipinas (BSP) governor and ahead of the release of the latest Philippine gross domestic product (GDP) data.

The Philippine Stock Exchange index (PSEi) fell by 55.41 points or 0.82% to close at 6,630.68 on Monday, while the broader all shares index declined by 20.90 points or 0.59% to end at 3,487.71.

“The sentiment was further dampened by the statement of the Bangko Sentral ng Pilipinas, saying that a strong economic growth would give them more room to tighten their policies,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The local bourse took some gains from last week’s gain, dropping by 55.41 points while awaiting the release of the Philippine fourth-quarter gross domestic product growth data this week,” she added.

BSP Governor Eli M. Remolona, Jr. said during an annual reception for the banking community last week that they are unlikely to ease their policy stance this semester and remain ready to deliver more rate hikes if needed, es-pecially if data show economic growth picked up in the last quarter of 2023.

The BSP hiked borrowing costs by 450 bps from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.

Meanwhile, fourth quarter and full-year 2023 Philippine GDP data will be released on Wednesday.

A BusinessWorld poll of 20 economists yielded a median estimate of 5.7% for fourth quarter GDP growth. If realized, this would be slower than the 5.9% expansion in the third quarter and the 7.1% growth in the same period in 2022.

For 2023, economic growth likely averaged 5.5%, the same poll showed, missing the government’s 6-7% target. This is also below the 7.6% expansion in 2022 and the slowest since the 9.5% contraction in 2020.

The PSEi declined ahead of the US Federal Reserve’s policy meeting, First Metro Investment Corp. Head of Research Cristina S. Ulang added in a Viber message.

The Fed is widely expected to keep benchmark rates at the 5.25-5.5% range for a fourth straight meeting during its Jan. 30-31 review.

All sectoral indices closed lower on Monday. Mining and oil sank by 122.03 points or 1.32% to 9,123.20; holding firms went down by 58.93 points or 0.92% to 6,336.08; property dropped by 25.72 points or 0.88% to 2,872.46; industrials decreased by 78.35 points or 0.86% to 9,015.33; financials retreated by 16.28 points or 0.85% to 1,890.67; and services lost 7.37 points or 0.46% to end at 1,595.24.

Value turnover fell to PHP 4.22 billion on Monday with 303.36 million issues changing hands from the PHP 13.58 billion with 2.88 billion shares seen on Friday.

Decliners beat advancers, 103 against 64, while 61 names closed unchanged.

Net foreign buying declined to PHP 459.98 million on Monday from the PHP 696.35 million seen on Friday. — R.M.D. Ochave