July 7, 2022

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PHL stocks decline ahead of BSP policy decision

2 min read

PHILIPPINE SHARES fell on Thursday as investors awaited the central bank’s policy decision announced after the market closed.

The bellwether Philippine Stock Exchange index (PSEi) retreated by 102.77 points or 1.66% to end at 6,065.23 on Thursday while the broader all shares index fell 43.62 points or 1.31% to 3,284.73.

Thursday’s close is the PSEi’s worst showing since it finished at 6,019.26 on Oct. 19, 2020.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message that the local bourse dropped as investors were cautious ahead of the policy decision of the Bangko Sentral ng Pilipinas (BSP).

“Investors traded cautiously while waiting for the BSP’s policy decision. The Philippine peso, which has been declining below the P54 per US dollar level, is seen to pose upside risks to inflation and discourage foreign investors from parking their funds in the Philippine market,” Mr. Tantiangco said.

First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message that the local market dropped on inflation worries. 

“Market bearish largely on jitters over higher inflation trajectory based on government pronouncements,” Ms. Ulang said.

After the market’s close, the BSP announced that its policy-setting Monetary Board decided to hike borrowing costs by 25 basis points (bps), bringing the key rate to 2.5%, to help stem rising inflation. This is despite market expectations of a 50-bp move following the US Federal Reserve’s hawkish turn.

Thursday’s hike followed an increase of the same magnitude at its May 19 meeting that kicked off the BSP’s tightening cycle following the cumulative 200 bps in cuts made in 2020 to support the economy amid the coronavirus pandemic.

Headline inflation reached 5.4% in May, faster than the BSP’s 2-4% target for the year. Year to date, inflation has averaged 4.1%.

The BSP on Thursday also raised its inflation forecasts. For 2022, it now sees inflation…

Neil

2022-06-23 09:00:37

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