Bets of dovish BSP rate move push up local stocks

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INVESTORS betting on dovish monetary policy from the Bangko Sentral ng Pilipinas (BSP) pushed up the main index on Thursday, a few minutes before the central bank announced a 25-basis-point rate hike.

The bellwether Philippine Stock Exchange index (PSEi) rose 0.42% or 29.51 points to close at 6,952.59 yesterday. The broader all-shares index also climbed 0.29% or 12.63 points to 4,254.87.

“Philippine shares climbed higher with bets being made ahead of the BSP’s policy meeting, as there has been no clear consensus with regard to the outcome,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message ahead of Thursday’s policy statement.

Timson Securities, Inc. trader Jervin S. de Celis also cited gains in blue-chip banks such as BDO Unibank, Inc. (up 2.97% to P118 apiece), Bank of the Philippine Islands (up 2.30% to P84.50), and Metropolitan Bank & Trust Co. (up 4.18% to P69.80) as market participants priced in the central bank’s decision.

Mr. De Celis added that the PSEi may have also tracked the performance of some emerging markets that rebounded following news that Chinese officials have threshed out a series of possible concessions with the Trump administration.

“Now, this lessens the worry among investors about the rout of global growth especially when [Federal Reserve Chair] Jerome Powell added that they have an upbeat outlook for the US economy. So, I think that buoyed market sentiment in the emerging markets and the BSP’s move to raise rates amid weaker peso and slower growth may have given investors the assurance that the Monetary Board is closely watching and is willing to take measures to manage whatever is needed to be addressed to keep our economic figures within their target,” Mr. De Celis added.

A few minutes after the market’s close yesterday, the BSP announced that its policy-setting Monetary Board has hiked interest rates by 25 basis points amid lingering upside risks to inflation.

Most counters finished in the red. Holding firms slid 0.37% or 25.88 points to 6,809.60; mining and oil declined 0.31% or 28.76 points to 8,985.55; services fell 0.27% or 3.79 points to 1,372.88; and property dropped less than a percent or 2.29 points to 3,365.98,

Meanwhile, financials jumped 2.52% or 39.56 points to 1,609.19 and industrials edged up 0.63% or 66.17 points to 10,569.72.

Advancers outnumbered decliners by a slim margin, 90 to 89, while 48 names remained unchanged.

Value turnover totaled P6.51 billion as 779.12 million shares switched hands, lower than Wednesday’s P7.05 billion worth.

Foreigners continued to dump shares on Thursday as net selling totaled P21.50 million, albeit going down from the previous day’s P831.56-million net outflow.

Meanwhile, the MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.2% on Thursday. — J.C. Lim