Stocks end lower on inflation, rate hike concerns

SHARES continued to drop on Monday as investors stayed cautious amid fears of rate hikes and inflationary pressures that continue to affect Western markets.

The 30- company Philippine Stock Exchange index ( PSEi) gave up 0.18% or 15.78 points yesterday to close at 8,487.91, marking the third day of losses for the bellwether.

The broader all-shares index also lost 0.04% or 2.48 points to finish at 5,025.90.

“Our index fell below 8,500 on the lack of fresh leads and the correction last week is still making investors stay in a cautious mood towards emerging markets like the Philippines,” Timson Securities, Inc. equity trader Jervin S. de Celis said in a mobile phone message.

Mr. De Celis noted that investors were also veering away from index stocks, as they “are the most affected when the Western markets dip due to inflation and rate hike fears.”

“Negative market sentiment continues from uncertainty amid wide swings in the US markets... We attribute this to lingering inflationary concerns as the BSP ( Bangko Sentral ng Pilipinas) has revised its inflation target to 4.3% from 3.4% previously,” Papa Securities, Corp. Research Head Ramon Vicente T. Kabigting said in an e-mail.

The financial sector was the sole sub-index that managed to post gains, rising 0.65% or 14.35 points to 2,198.89.

On the other hand, the mining and oil counter was down 1.22% or 139.76 points to 11,284.45, followed by industrials, which dropped 0.82% or 95.53 points to 11,470.62. Property ended 0.29% or 11.26 points lower at 3,812.85; services slipped 0.24% or 4.18 points to 1,692.21; while holding firms shed 0.08% or 7.67 points to 8,607.61.

The market saw thinner trading on Monday, with a value turnover of P5.86 billion after some 2.39 million issues switched hands, down from the P8.62billion turnover recorded last Friday.

Decliners trumped advancers, 118 to 94, while 36 issues were flat.

Net foreign selling, meanwhile, swelled to P1.27 billion yesterday, significantly higher than the net outflow of P136.80 million recorded last Friday.

Papa Securities’ Mr. Kabigting attributed the increase on outbound funds to continued volatility in the market.

Meanwhile, Timson Securities’ Mr. De Celis said investors are looking forward to the corporate earnings season as well as the MSCI index rebalancing announcement on Tuesday, which will be effective on Mar. 1. “I guess this will also urge investors to keep cash for more buying power to spend on the new stocks that will be included in the index.”

Meanwhile, most Southeast Asian stocks rose on Monday as Wall Street’s recovery in the last session instilled some confidence into Asian markets.

Wall Street’s main stock indexes climbed more than 1% on Friday, giving investors some solace after a week of major swings that shook the market out of months of calm.