Philippine stocks fall on surprise BSP cut, profit taking

Philippine stocks dropped anew on Thursday on profit taking after the market’s two-day climb and as the central bank delivered a surprise rate cut, noting that the economic outlook has softened as the ongoing corruption scandal has affected business sentiment.

The benchmark Philippine Stock Exchange index (PSEi) fell 0.67% or 41.34 points to close at 6,057.40, while the broader all shares index dropped 0.47% or 17.64 points to 3,667.01.

“The local market declined as investors took profits following a two-day rally. The peso’s depreciation also weighed on the local bourse. For the most part of the day, investors traded cautiously while waiting for the BSP’s (Bangko Sentral ng Pilipinas) policy decision,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

“The market tracked lower after the peso breached PHP 58 following the BSP’s surprise move to cut rates by another 25 bps (basis points) to support the domestic economy,” AP Securities, Inc. said in a market note.

On Thursday, the local unit fell by 28.5 centavos to close at PHP 58.235 versus the greenback from its PHP 57.95 finish on Wednesday, Bankers Association of the Philippines data showed.

The BSP delivered a fourth straight 25-bp cut to bring the target repurchase rate to 4.75%, the lowest since September 2022. Only six of the 16 analysts polled by BusinessWorld expected a reduction at this week’s meeting.

The central bank has now lowered borrowing costs by a total of 175 bps since it began its easing cycle in August 2024.

BSP Governor Eli M. Remolona, Jr. said that they cut rates as the outlook for the economy has softened due to the widening corruption scandal involving state flood-control and infrastructure projects, which has affected business sentiment. “All in all, we see more scope for a more accommodative monetary policy.”

He said another reduction is possible at their last meeting for the year on Dec. 11, with more cuts beyond that also on the table.

Sectoral indices were mixed on Thursday. Financials dropped by 1.65% or 34.23 points to 2,030.52; services sank by 1.04% or 24.14 points to 2,285.36; and holding firms decreased by 0.58% or 28.90 points to 4,889.08.

Meanwhile, mining and oil rose by 2.79% or 401.03 points to 14,742.44; industrials climbed by 0.11% or 10 points to 9,013.39; and property increased by 0.11% or 2.72 points to 2,285.15.

“There were only four index gainers for the day, led by AREIT, Inc., jumping 7.49% to PHP 45.20. Puregold Price Club, Inc., was the main index laggard, falling 6.11% to PHP 39.95,” Mr. Tantiangco said.

Decliners outnumbered advancers, 135 to 72, while 55 names closed unchanged.

Value turnover increased to PHP 6.51 billion on Thursday with 5.35 billion shares traded from PHP 6.38 billion with 4.54 billion shares that changed hands on Wednesday.

Net foreign buying declined to PHP 112.15 million on Thursday from PHP 540.06 million on Wednesday. — A.G.C. Magno