PSEi drops further as BSP extends hawkish pause

The main index dropped for the fifth straight session on Monday as investors preferred to stay on the sidelines ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy statement.

The benchmark Philippine Stock Exchange index (PSEi) retreated by 0.06% or 4.39 points to end at 6,741.07 on Monday, while the broader all shares index gained by 0.12% or 4.41 points to close at 3,559.59.

“The local bourse inched down this Monday… amid the shortened trading week. Many also maintained a cautious stance while waiting for the meeting of the BSP,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message. “Although it has already been anticipated that they would keep interest rates unchanged, investors were waiting for the BSP’s outlook on the inflation rate amid lingering risks. After trading, the Monetary Board announced the retention of interest rates at 6.5%, as expected.”

“Philippine shares traded quietly as the Monday session was sandwiched between a weekend and a long holiday. However, activity would probably pick up after the BSP released its latest decision regarding its key policy rate. At market close, the Philippine central bank maintained the status quo while vigilantly making decisions as more data come in,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said in a Viber message.

Philippine financial markets are closed for nonworking days on April 9 (Day of Valor) and April 10 (Eid’l Fitr).

The BSP on Monday kept its policy rate unchanged at a near 17-year high of 6.5% for a fourth straight meeting, as expected by 16 analysts in a BusinessWorld poll last week.

Rates on the central bank’s overnight deposit and lending facilities were likewise kept at 6% and 7%, respectively.

BSP Governor Eli M. Remolona, Jr. said in a briefing after the meeting that the Monetary Board deemed it necessary to maintain its tight policy settings amid persistent upside risks to inflation stemming from higher food and transport costs, adding they stand ready to adjust rates as needed to ensure price stability.

The central bank hiked borrowing costs by 450 basis points from May 2022 to October 2023 to tame elevated inflation.

Sectoral indices were split. Holding firms declined by 0.48% or 30.69 points to 6,293.77; financials went down by 0.36% or 7.37 points to 2,018.54; and industrials dropped by 0.01% or 1 point to 8,802.59.

Meanwhile, mining and oil rose by 1.1% or 88.80 points to 8,138.97; property went up by 0.93% or 25.03 points to 2,690.88; and services climbed by 0.84% or 15.60 points to 1,862.58.

Value turnover dropped to PHP 4.26 billion on Monday with 571.46 million issues changing hands from the PHP 14.27 billion with 2.3 billion shares traded on Friday.

Advancers outnumbered decliners, 104 against 88, while 52 issues ended unchanged.

Net foreign selling rose to PHP 930.83 million on Monday from PHP 521.32 million on Friday. — R.M.D. Ochave