PSEi plunges to 6,000 range as BSP hikes rates

Philippine shares plunged to the 6,000 range on Thursday as selling continued amid the Bangko Sentral ng Pilipinas’ (BSP) latest rate hike that could tighten financial conditions and weigh on the economy.

The Philippine Stock Exchange index (PSEi) tumbled by 2.16% or 132.65 points to close at 6,004.58, while the broader all shares index fell by 1.62% or 55.07 points to end at 3,339.50.

This was the PSEi’s lowest finish in over two months or since June 24’s 5,991.37. This was also its biggest single-day decline since that same date when the main benchmark lost 2.2% or 134.85 points from the prior session.

“The local index closed lower as persistent selling pressure weighed on sentiment throughout the session. The BSP’s widely anticipated 25-basis-point (bp) rate hike to 5% made investors more cautious toward equities, compounded by uncertainty in the Middle East and forecasts of slower loan growth,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The BSP’s latest hike, which was predicted by 19 of 24 analysts in a BusinessWorld poll, was its third straight tightening move since April and brought the policy rate to its highest level in over a year.

“The local market declined as investors traded cautiously while waiting for the BSP’s policy decision… This added to the bearish sentiment as higher interest rates are expected to further slow down the economy’s growth, holding all other things constant,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

COL Financial Group Research Analyst Denise Joaquin said the bellwether index barely held above 6,000 before the central bank’s policy statement. The PSEi opened Thursday’s session at 6,096.70, lower than Wednesday’s close of 6,137.23. It sank to an intraday low of 5,966.81.

“BSP Governor Eli M. Remolona, Jr. said the rate hike was a preemptive move in response to upside inflation risks, including El Niño and further minimum wage increases, adding that the central bank is prepared to tighten policy settings as much as needed to bring inflation back to target,” Ms. Joaquin said in a Viber message.

All sectoral indices closed in the red. Services slid by 3.81% or 123.54 points to 3,118.80; financials sank by 1.67% or 32.20 points to 1,898.29; industrial dropped by 1.55% or 125.96 points to 8,026.45; holding firms fell by 1.39% or 61.74 points to 4,364.21; mining and oil retreated by 0.74% or 145.99 points to 19,692.81; and property went down by 0.58% or 10.93 points to 1,878.61.

Decliners overwhelmed advancers, 126 to 55, while 54 names were unchanged.

“Amongst the index members, only Ayala Land, Inc. was the day’s index gainer, climbing 0.65% to PHP 15.50,” Mr. Tantiangco said.

Value turnover increased to PHP 7.82 billion on Thursday with 1.08 billion shares traded from the PHP 5.35 billion with 862.39 million issues on Wednesday.

Net foreign selling ballooned to PHP 2.32 billion from PHP 692.10 million in the previous session. — A.G.C. Magno