Local share prices dropped again on concern over inflation and the possibility of more interest rate hikes by the US Federal Reserve and the Bangko Sentral ng Pilipinas.
The main index fell by 80.29 points or 1.16 percent to close at 6,842.79 with the Industrial sector leading the retreat. Volume weakened to 940 million shares worth P5.62 billion as losers beat gainers 112 to 81 with 45 unchanged.
“Philippine equities retreated after foreign investors returned their focus to the latest batch of corporate earnings, a day after Fed Chair Jerome Powell’s remarks that inflation is coming down, but the US central bank may not necessarily be ready to slow or stop rate increases,” said Regina Capital Development Corporation Managing Director Luis Limlingan.
He noted that, “back home everyone will be awaiting the latest results of the quarterly MSCI rebalancing. Some are speculating on specific index names that could be overweight or underweight.“
Philstocks Financial Assistant Research Manager Claire Alviar said “The local bourse dropped on higher possibility that the Bangko Sentral ng Pilpinas (BSP) will be aggressive on its upcoming meeting and might raise interest rates by 50 bps.”
She added that, “Other than the rate hike, investors were also concerned about the high inflation in the country that triggers the BSP to tighten the monetary policy. The January’s inflation came in higher than the forecast of the BSP. This shows robust demand especially with the strong labor data.”
“On the upside, strong demand may drive the revenues of most firms, however, margins may decline amid high inflation particularly if the BSP will further hike interest rates,” Alviar explained.