Philippine shares fall, weighed by FDI, Fed meet

Philippine equities declined on Wednesday as reports of plunging foreign direct investment (FDI) in March and the US Federal Reserve’s policy meeting weighed on sentiment.

The benchmark Philippine Stock Exchange index (PSEi) fell by 1.12% or 73.20 points to close at 6,434.06. The broader all-share index went down by 0.87% or 30.21 points to 3,437.04.

“The local bourse slipped by 73.2 points to 6,434.06 as the lower net inflow of foreign direct investments to the Philippines weighed on sentiment,” Claire T. Alviar, Philstocks Financial, Inc. research analyst, said in a Viber message.

“Lower FDI net inflow dampened investors’ sentiment because this may have negative spillover effects on the economy, such as slower economic growth and reduced consumer spending if this continues to decline,” she added.

US inflation continued to cool in May, “fueling optimism that the Fed may skip a rate hike at its upcoming policy-setting meeting,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a Viber message.

“US May inflation increased by 4% year on year, marking the slowest annual rate since March 2021,” he said. “Following the report, traders increased their bets that the Fed will keep rates unchanged on Wednesday after hiking at 10 consecutive meetings.”

He said net FDI inflows in the Philippines slipped in March over concerns about worldwide economic growth slowdown, further affecting investor sentiment.

FDI net inflows declined by 30.7% to USD 548 million in March from a year earlier, data from the central bank showed.  These were 47.6% lower than USD 1.05 billion in February.

The US central bank raised borrowing costs by 25 basis points (bps) last month, bringing the Fed fund rate to 5-5.25%. It has increased borrowing costs by 500 bps since March 2022.

The Federal Open Market Committee is expected to review its policy on June 13-14.

Back home, all sectoral indices fell on Wednesday except industrials, which inched up by 0.003% or 0.29 point to 9,209.33.

Services declined by 2.04% or 31.49 points to 1,512.38, while property fell by 1.58% or 41.75 points to 2,585.09. Holding firms declined by 1.27% or 82.53 points to 6,400.64, while mining and oil slid by 1.13% or 113.71 points to 9,950.88. The financial index fell by 0.55% or 10.18 points to 1,831.41.

Value turnover surged to PHP 11.45 billion, with 1.16 billion shares changing hands. Decliners outnumbered advancers, 118 to 72, while 41 stocks were unchanged.

Net foreign selling jumped to PHP 533.22 million from PHP 217.41 million on Tuesday. — Adrian H. Halili