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PHL stocks tumble on BSP interest rate hike bets

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PHILSTAR/KRIZ OHN ROSALES

By Krista A.M. Montealegre, National Correspondent

STOCKS retreated on Thursday to their lowest level in more than a year, dragged lower by mounting fears about higher interest rates.

The bellwether Philippine Stock Exchange index (PSEi) dropped for the second straight session, tumbling 200.97 points or 2.59% to close at 7,535.10, the lowest level since April 19, 2017 when the benchmark index ended at 7,522.98.

The all-shares index fell 96.60 points or 2.05% to 4,602.48.

“The market is still pricing in the effects of a possible rate hike by both the Bangko Sentral ng Pilipinas (BSP) and to a lesser extent the Federal Reserve given the lower probability of a hike based on the current consensus,” PNB Securities President Manuel Antonio G. Lisbona said in a mobile phone message.

“What is weighing on the market is fears of rising rates in the United States so if ever the BSP will start raising rates as well on May 10 that will be a trigger for foreign funds to not sell any further and it will temper the depreciation of the peso,” Miko A. Sayo, trader at AP Securities, said in an interview.

Several economists are anticipating a rate hike when the BSP Monetary Board reviews policy settings next week, noting that such a move will keep borrowing rates competitive at a time of faster inflation.

Headline inflation averaged 3.8% as of end-March, just below the 3.9% expected by the BSP for the full year and close to breaching the 2-4% target band.

In the United States, the Federal Open Market Committee kept interest rates unchanged on Thursday, a move widely expected by investors. Policy makers, however, signaled growing confidence in the outlook for inflation, leaving it on course to jack up borrowing costs next month.

Heavy foreign selling in emerging markets and a number of first-quarter earnings reports that came in below forecast also contributed to the market’s weakness, Miguel A. Agarao, analyst at Wealth Securities, Inc., said in a mobile phone message.

All counters finished in the red, with holding firms sustaining the heaviest losses after plummeting 269.66 points or 3.46% to 7,511.03.

Financials plunged 51.16 points or 2.61% to 1,909.12; industrials slid 188.89 points or 1.69% to 10,932.50; services went down 25.36 points or 1.64% to 1,518.13; property lost 51.97 points or 1.43% to 3,561.00; and mining and oil shed 66.05 points or 0.63% to 10,409.96.

Value turnover accelerated to P7.21 billion as 1.14 billion shares changed hands, from P6.53 billion on Wednesday.

Decliners dominated advancers, 128 to 50, while 52 issues were unchanged.

Foreigners continued to dump local equities, as net sales picked up to P963.29 million from P340.68 million in the prior session.

“While we are very near immediate support, it seems that there is still some bearish pressure on the market and may test the 7,250 level soon,” PNB’s Mr. Lisbona said.