STOCKS suffered a bloodbath during Wednesday’s trading after August inflation figures ended much higher than expected.
The Philippine Stock Exchange index (PSEi) — considered a local barometer for investor confidence — plunged 1.64% or 129.55 points to close at 7,752.27 Wednesday, September 5. The index hit an intraday low of 7,699.02 before paring losses slightly in time for the closing bell.
The broader all-shares index also dropped 1.33% or 63.84 points to finish at 4,732.02.
“The fresh nine-year high inflation figure for August did not sit well with market participants, as [Wednesday]’s trading was marked with selling pressure throughout the day,” Regina Capital Development Corp. Equity Analyst Rens V. Cruz II said in a mobile message.
The Philippine Statistics Authority reported Wednesday, September 5, that headline inflation accelerated to 6.4% last August, faster than July’s 5.7%. This is the highest figure recorded since inflation shot up to 6.6% in March 2009.
The August inflation reading beat all market estimates, including the Bangko Sentral ng Pilipinas’ (BSP) estimate range of 5.5-6.2%, as well as the Department of Finance’s 5.9%.
Year-to-date inflation is now at 4.8%, well beyond the government’s target of 2-4%.
Analysts are now expecting another rate hike from the BSP to curb inflation.
“The surprise inflation print of 6.4% caused investors to cash in, as this will likely force the BSP to raise their policy rates more aggressively from a widely expected 25 basis points to most probably 50 basis points later this month,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said via text on Wednesday.
All sectoral indices were bleeding at the end of trading, with financials recording the biggest loss at 2.81% or 50.76 points to 1,753.84. Property followed with a drop of 1.85% or 73.04 points to 3,856.96; mining and oil shed 1.66% or 167.73 points to 9,907.84; and holding firms gave up 1.41% or 110.35 points to 7,709.23.
Industrials also went down 0.87% or 99.33 points to 11,226.33, while services slipped 0.44% or 6.91 points to 1,536.78.
Trading thinned slightly to P5.89 billion after some 1.69 billion issues switched hands, compared to Tuesday’s P5.94-billion value turnover.
Decliners were almost triple that of advancers, 146 to 51, while 38 issues closed flat.
Foreign investors fled the market, posting net sales of P1.04 billion, significantly higher than the previous session’s P257.56-million net outflow. This is also the highest net foreign outflow in more than two weeks.
“Unfortunately, bearish sentiment is expected to persist at least for the remainder of the week, as investors will still digest the components of the latest CPI (consumer price index) numbers, as well as gradually factor in the implications — including a higher weight on a September rate hike, and the peso’s drop to a fresh 12-year low,” Regina Capital’s Mr. Cruz said. — Arra B. Francia

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