Investors take cover ahead of inflation report

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PSE BGC bell

THE MAIN INDEX plunged deeper into bear territory on Thursday as investors sold stocks most affected by rising inflation and interest rates.

The 30-company Philippine Stock Exchange index (PSEi) fell 1.63% or 117.53 points to 7,093.34 yesterday, wiping out Wednesday’s recovery. Thursday’s finish marked a 21.7% drop from PSEi’s last peak closing of 9,058.62 on Jan. 29, pushing the bourse farther into bear territory which involves a fall of at least 20% from the latest record high.

The broader all-shares index also stumbled 1.19% or 52.63 points to 4,370.34.

“Investors are on the sidelines, and the lack of catalysts failed to push the market… Mostly contributing to the drop is the property and financial sector” which, Philstocks Financial, Inc. Research Associate Piper Chaucer Tan said in a mobile phone message, are sectors most sensitive to an elevated inflation and interest rate environment.

All sectoral indices ended in negative territory, led by the property sector which dumped 2.59% or 91.95 points to 3,465.72, and financials which shed 2.11% or 34 points to 1,580.14. Holding firms dropped 1.28% or 90.60 points to 6,997.82; mining and oil slipped 0.90% or 78.48 points to 8,687.94; industrial gave up 0.78% or 82.65 points to 10,460.81; while services went down 0.45% or 6.81 points to 1,500.69.

Regina Capital Development Corp. Managing Director Luis A. Limlingan noted that investors await inflation results. “Philippine stocks succumbed to profit taking after one of the rarer occasions of bargain hunting yesterday with investors anticipating the inflation results,” Mr. Limlingan said in a mobile message.

The Philippine Statistics Authority is scheduled to report September inflation today which has been estimated at 6.4% by the Department of Finance and 6.8% by the central bank. A BusinessWorld poll of 13 economists late last week yielded a 6.8% median which, if realized, would be the fastest inflation since February’s 2009’s 7.2%.

Analysts believe damage wreaked by super typhooon Mangkhut, locally called Ompong, last month — estimated at least P26.7 billion worth of crops and livestock — likely stoked price pressures further.

Some 1.05 billion shares worth P4.31 billion changed hands on Thursday, compared to Wednesday’s 587.96 million issues worth P5.44-billion.

“Volume and value of the market also confirms that investors are on the sidelines,” Philstocks’ Mr. Tan said.

Stocks that declined were nearly double those that gained, 122 to 68, while 51 others steadied.

The list of the 20 most active stocks showed 15 that lost, including index heavyweights Ayala Land, Inc. (down 4.69% to P38.60), Ayala Corp. (down 2.18% to P919.50), and SM Prime Holdings, Inc. (down 1.16% to P34.10).

Metro Pacific Investments Corp. and Globe Telecom, Inc. managed to weather the sell-off, gaining 1.04% to P4.85 and 0.45% to P2,220, respectively. — Arra B. Francia