Philippine shares inch lower as rate cut bets ease

Philippine shares ended lower on Tuesday amid expectations that the Bangko Sentral ng Pilipinas (BSP) would implement fewer rate cuts this year.

The benchmark Philippine Stock Exchange index (PSEi) inched down by 0.23% or 14.9 points to end at 6,368.80 on Tuesday, while the broader all shares index fell by 0.2% or 7.21 points to close at 3,440.54.

Philippine financial markets were closed on Monday (June 17) in observance of Eid’l Adha or the Feast of Sacrifice.

“The local bourse opened this shortened trading week in the red amid talks that the BSP will implement fewer rate cuts this year, taking cues from the US Federal Reserve moves,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The BSP will probably cut its policy rate after the Fed, which has signaled it may start easing as late as December, Finance Secretary Ralph G. Recto said last week.

Asked if the BSP would begin its easing cycle once the US central bank cuts rates, Mr. Recto, a member of the Monetary Board, said this was “highly probable.”

BSP Governor Eli M. Remolona, Jr. earlier said the BSP could begin cutting rates as early as August, for a total of 25-50 basis points in easing for the entire year.

Mr. Remolona has also said the BSP does not need to wait for the US central bank to begin reducing rates because its own monetary decisions are “independent” of the Fed.

The Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023. Its next meeting is on June 27.

Meanwhile, the US central bank last week maintained its benchmark overnight interest rate in the current 5.25%-5.5% range, where it has been since last July.

Analysts said this week that the BSP is now expected to deliver fewer rate cuts later this year with the Fed likely to delay its own policy easing.

“The market was down on continued foreign selling,” First Metro Investment Corp. Head of Research Cristina S. Ulang added in a Viber message.

Net foreign selling rose to PHP 262.54 million on Tuesday from the PHP 138.21 million recorded on Friday.

The majority of sectoral indices ended higher on Monday. Industrials rose by 0.83% or 75.08 points to 9,047.08; mining and oil climbed by 0.48% or 42.39 points to 8,728.18; holding firms increased by 0.47% or 26.62 points to 5,581.15; and property went up by 0.03% or 0.88 points to 2,457.28.

Meanwhile, financials declined by 1.97% or 38.9 points to 1,932.80, and services dropped by 0.42% or 8.26 points to 1,940.71.

Value turnover dropped to PHP 2.97 billion on Tuesday with 706.84 million shares changing hands from the PHP 3.11 billion with 298.24 million issues traded on Friday.

Decliners outnumbered advancers, 96 against 86, while 51 names closed unchanged. — RMDO