PSEi drops in cautious trade ahead of BSP review

Philippine shares closed in the red on Monday as investors stayed on the sidelines ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Thursday.

The Philippine Stock Exchange index (PSEi) fell by 0.51% or 34.44 points to end at 6,613.36 on Monday, while the broader all shares index dropped by 0.26% or 9.70 points to finish at 3,598.54.

“The local market declined this Monday as investors took a cautious stance while waiting for the BSP’s policy meeting set this week,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors are seen to be pricing in the possibility that the BSP will still hold policy rates unchanged in light of the recent inflation, labor market, and gross domestic product figures.”

“Trading was tepid… as many stayed out amid the uncertainties,” he added. Value turnover went down to PHP 3.67 billion on Monday with 505.37 million shares changing hands from the PHP 6.13 billion with 856.95 million issues traded on Friday.

A BusinessWorld poll conducted last week showed that nine out of 16 analysts surveyed expect the Monetary Board to deliver a 25-basis-point (bp) rate cut at its meeting on Thursday (Aug. 15), bringing the target reverse repurchase rate to 6.25% from the current over 17-year high of 6.5%.

On the other hand, seven others expect the BSP to keep rates steady this week.

The last time the BSP reduced rates was in November 2020, when it delivered a 25-bp cut and brought the key rate to 2% to support economic recovery amid the coronavirus pandemic.

From May 2022 to October 2023, the BSP hiked borrowing costs by 450 bps.

“Philippine investors kept to cash as many awaited the latest results of the MSCI rebalancing which will be out later, while also waiting for the US to kick off their trading week,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“In addition, many will be making bets ahead of the BSP meeting on Thursday, as many are jostling what will be the Monetary Board’s stance with policy rates,” he added.

Almost all sectoral indices closed lower on Monday, with services being the lone gainer, rising by 1.29% or 26.59 points to end at 2,079.21.

Mining and oil dropped by 1.71% or 143.21 points to 8,191.94; holding firms retreated by 1.52% or 88.56 points to 5,718.01; financials went down by 0.6% or 12.01 points to 1,987.87; property declined by 0.52% or 13.75 points to 2,605.03; and industrials lost 0.28% or 25.29 points to close at 8,995.27.

“Of the index members, Century Pacific Food, Inc. was at the top, rising 2.79%. Nickel Asia Corp. was the worst performing index member for the day, plunging 5.07%,” Mr. Tantiangco said.

Market breadth was negative as decliners outnumbered advancers, 105 versus 79, while 52 names closed unchanged.

Net foreign buying rose to PHP 205.66 million on Monday from PHP 87.45 million on Friday. — R.M.D. Ochave