The stock market plunged past 8,000 on Wednesday, halting its fall just a few points short of the 7,800 level on continued investor worries over possible interest rate hikes.
The benchmark Philippine Stock Exchange index (PSEi) lost 150.53 points or 1.87 percent to close at 7,909.07, extending a mostly downward run since a record high of 9,058.62 was hit last January 29.
The wider All Shares, meanwhile, retreated 1.23 percent or 59.43 points to end at 4,789.06.
“Investors likely chose to lighten [their portfolios]ahead of the Fed policy decision tonight and the BSP tomorrow (Thursday),” China Bank Securities Corp. research director Garie Ouano said.
“Technical factors also likely played as a role as the index broke major support levels this week,” he added.
The US Federal Reserve is expected to announce its first interest rate hike for the year and markets are on the lookout for signs pointing to the pace and extent of further increases.
Still up in the air is whether the Bangko Sentral ng Pilipinas’ policymaking Monetary Board will do the same given rising inflation.
Ouano said a rate hike was unlikely as monetary officials had stressed that they expected inflation to moderate by next year.
“So I see no compelling reason to raise rates,” he said.
Diversified Securities, Inc. trader Aniceto Pangan, however, said he expected key interest rates to be increased as inflation — at 4.5 percent in February based on 2006 prices — had breached the government’s 2.0-4.0 percent target.
Papa Securities Corp. Ramon Vicente Kabigting pointed to foreign selling as having weighed on the index but said that the country’s “underlying strengths” should convince investors to return.
Foreign funds bought P4.36 billion issues and sold P5.87 billion on Wednesday.
“Downside risks such as the upward trajectory of the Fed’s benchmark rates and the possibility of a trade war between China and the US do not seem to be permanent fixtures in the global economy,” Kabigting said.
“While they may occur from time to time, the underlying strengths in the system—particularly in the Philippines—should outweigh these concerns beyond the short term,” he added.
Kabigting expressed optimism that the government would be able to fund its “Build Build Build” program — expected to underpin economic growth — given recent developments such as a successful maiden panda bond offering.
“This should drive our sentiment even in an investing environment with rising interest rates,” he said.
The property sector posted the steepest fall on Wednesday, down 2.33 percent as Ayala Land, Inc. fell anew by 3.05 percent or P1.25 to P39.75 per share.
Parent firm Ayala Corp. contributed to a 2.27-percent drop for holding firms, falling by 2.24 percent or P21 to P916 per. SM Investments Corp, which fell by 1.95 percent or P18.50 to P930 also weighed on the sector.
Only the services and mining and oil indices were in the green, up 0.02 percent and 1.81 percent, respectively.
Over 2.07 billion issues valued at P9.5 billion changed hands.
Losers led winners, 139 to 85, while 41 issues were unchanged.
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