The Philippine Stock Exchange index (PSEi) rose on Tuesday, Jan. 13, as investors used the double-digit decline in foreign direct investment data as catalyst to lock in gains following a three-day rally.

The benchmark index fell 11.2 points, or 0.17 percent, to finish at 6,408.76. While the retreat was modest, it showed a cautious shift in sentiment as market participants weighed domestic economic headwinds against anticipation of crucial United States (US) inflation data. Industrial shares led the decline, overshadowing gains in the mining and services sectors.

Trading remained active, with volume reaching 1.26 billion shares valued at ₱6.75 billion. Despite the index’s negative finish, market breadth remained positive as 104 stocks rose, 94 fell, and 70 remained unchanged.

The primary downward pressure stemmed from the sharp contraction in capital inflows. Central bank data released for October revealed that net inflows of foreign direct investment dropped 40 percent year-on-year, a figure that spooked investors despite the month’s total being the highest in a three-month period.

Analysts noted that the sustained year-on-year weakness in these figures suggests a cooling of long-term investor appetite for the archipelago's economy.

Luis Limlingan, managing director at Regina Capital Development Corp., described the session as a period of profit-taking.

He noted that the benchmark had faced three consecutive days of buying pressure, making the index ripe for a breather. The FDI data provided the necessary excuse for traders to exit positions, particularly after the peso weakened slightly to ₱59.341 against the dollar.

Japhet Tantiangco, research manager at Philstocks Financial, said the market is currently in a “digestion phase.”

Beyond the local FDI figures, he pointed toward a broader "wait-and-see" approach as global markets look toward the US consumer price index report for December. The upcoming inflation data is expected to be a decisive factor in the Federal Reserve's interest rate trajectory, which historically dictates the flow of capital in emerging markets like the Philippines.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., added that the slight correction in the PSEi was a direct reflection of the persistent decline in foreign investment and the creeping depreciation of the local currency.

As the market navigates these technical corrections, the ₱6,400 level remains a key psychological support point for the benchmark index.