Stocks sink as inflation picks up sharply in Sept.

Philippine shares slumped on Thursday as headline inflation picked up sharply in September, which could cause the central bank to hike benchmark rates anew.

The Philippine Stock Exchange index (PSEi) went down by 119.60 points or 1.89% to end at 6,178.60 on Thursday, while the broader all shares index dropped by 49.81 points or 1.46% to 3,348.75.

“The unexpectedly high September inflation print poured cold water on investor sentiment and sank the index to its lowest close in over a week,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“This negative surprise brought selling pressure throughout the trading session and was in stark contrast to the positive performance of most Asian stock markets,” Mr. Colet said.

Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio noted that this was the second straight month that inflation rose year on year.

“This heightened worries over the local economy as it raised the chances that the BSP (Bangko Sentral ng Pilipinas) will hike rates further,” Mr. Plopenio said in a Viber message.

Headline inflation picked up a three-month high of 6.1% in September from 5.3% in August, data released by the Philippine Statistics Authority on Thursday showed.

This was slower than the 6.9% print in September 2022, but matched the high end of the BSP’s 5.3-6.1% forecast for the month.

The September consumer price index was also above the 5.4% median estimate in a BusinessWorld poll of 17 analysts conducted last week and marked the 18th consecutive month that inflation exceeded the 2-4% target for the year.

For the first nine months, inflation averaged 6.6%, above the central bank’s 5.8% forecast for the year.

The BSP last month kept its policy rate unchanged at 6.25% for a fourth straight meeting after raising borrowing costs by 425 basis points from May 2022 to March 2023.

The central bank will hold its next policy meeting on Nov. 16. BSP Governor Eli M. Remolona earlier said he is open to an off-cycle interest rate hike before next month’s meeting if inflation risks grow.

All sectoral indices dropped on Thursday. Property fell by 64.06 points or 2.44% to 2,555.09; industrials went down by 155.12 points or 1.72% to 8,831.61; mining and oil dropped by 184.98 points or 1.71% to 10,601.28; financials lost 29.52 points or 1.6% to end at 1,810.17; holding firms shed 93.86 points or 1.56% to 5,887.76; and services decreased by 23.67 points or 1.56% to 1,492.

Value turnover went up to PHP 5.43 billion on Thursday with 676.78 million shares changing hands from the PHP 4.68 billion with 733.61 million shares seen on Wednesday.

Decliners outnumbered advancers, 119 versus 67, while 45 shares closed unchanged.

Net foreign selling dropped to PHP 475.80 million on Thursday from PHP 669.83 million on Wednesday. — SJT