Stocks slip on profit taking before BSP decision

Stocks dropped on Thursday as investors pocketed gains ahead of the Bangko Sentral ng Pilipinas’ (BSP) monetary policy decision.

The Philippine Stock Exchange index (PSEi) fell by 45.12 points or 0.7% to close at 6,364.97 on Wednesday, while the broader all shares index went down by 16.61 points or 0.48% to end at 3,409.80.

“Investors locked in their gains ahead of the MB (Monetary Board) policy rate decision announcement today. The street expects that the BSP won’t be mimicking the Federal Reserve’s recent rate hike this time around,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message ahead of the BSP’s policy announcement on Thursday.

“Stocks slid due to concerns regarding divergent trends in benchmark yields. While US yields were on the rise due to recent stronger than anticipated economic data, local GDP (gross domestic product) growth fell significantly short of expectations, prompting a series of downgrades in growth forecasts for the Philippines. Consequently, this constrains the Bangko Sentral ng Pilipinas from aligning with potential interest rate hikes in the United States,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

The BSP on Thursday kept benchmark interest rates unchanged for a third straight meeting as it expects inflation to return within its 2-4% target next quarter, even as upside risks to prices remain.

The Monetary Board maintained its policy rate at a near 16-year high of 6.25%. The interest rates on the BSP’s overnight deposit and lending facilities were also kept at 5.75% and 6.75%, respectively.

The decision was in line with the results of a BusinessWorld poll last week, which showed that 13 out of 15 analysts see the central bank keeping rates steady.

The BSP raised borrowing costs by 425 basis points (bps) from May 2022 to March 2023.

For its part, the Fed last month raised borrowing costs by 25 bps, bringing its target interest rate to a range between 5.25% and 5.5%.

The US central bank has now hiked rates by a total of 525 bps since March 2022.

Almost all sectoral indices declined on Thursday, except for services, which gained 4.08 points or 0.26% to end at 1,564.03.

Meanwhile, holding firms declined by 99.90 points or 1.64% to 5,974.47; mining and oil slid by 91.87 points or 0.92% to 9,874.65; industrials decreased by 75.32 points or 0.83% to 8,913.89; financials fell by 4.33 points or 0.22% to 1,896.59; and property went down by 3.89 points or 0.14% to 2,651.70.

Value turnover rose to PHP 4.92 billion on Thursday with 343.14 million shares changing hands from the PHP 3.86 billion with 385.87 million issues seen on Wednesday.

Decliners outnumbered advancers, 95 versus 74, while 62 names closed unchanged.

Net foreign buying went down to PHP 76.12 million on Thursday from the PHP 100.99 million on Wednesday.

For Friday, Mr. Vistan placed the PSEi’s support at 6,250. — AHH