PH stocks tumble on higherthan-expected Jan inflation

THE unexpectedly high January inflation figure weighed on Philippine stocks on Tuesday with the bellwether index plunging deeper after two straight sessions.

In intraday trading, the Philippine Stock Exchange index ( PSEi) shed as much as 1.93 percent or 166.40 points to 8,449.60, before recovering near the close of trade on renewed buying.

At the closing bell, the PSEi was down just 0.76 percent or 65.58 points, finishing at 8,550.42.

The broader All Shares lost 0.84 percent or 42.51 points to end at 5,027.91.

“[ There were] emerging concerns over possible upward adjustments in interest rates particularly as domestic inflation numbers came up at 4 percent for January, which is higher than the consensus,” said Philstocks Financial, Inc. research head Justino Calaycay, Jr.

The central bank said Tuesday that headline inflation in January accelerated to 4 percent, the highest in more than three years, due to the impact of the first package of tax reform law coupled with higher fuel and food prices.

The January inflation was higher than the 3.3 percent posted in December last year.

“Even the US markets fell by more than 1,600 points so there was a lot of bearish sentiments prevailing over the equity markets right now,” Calaycay said, noting that many funds were considering shifting to fixed-income securities “because of expectations of higher interest rates in the near future.”

However, the downtrend is expected to taper off in the succeeding days particularly as the earnings season for listed firms’ fourth quarter and full- year performances commences, he said.

“Fourth quarter earnings season… will provide some boost to stocks but the real gravy on the market will probably be coming sometime April or May in the first quarter numbers that they will be reporting … because then that will show whether the Train had an impact— positive or negative— on investments, government spending, and household consumption,” Calaycay said.

In a separate comment, Eagle Equities, Inc. research Chris Mangun said the market dropped almost 2 percent in early trading due to the continued outflow of foreign funds.

“And, also because of markets crashing in the West plus we also saw inflation come in at the highest it has been in two years at 4 percent,” he added.

“We saw huge turnover value traded today at P10.2- B, which means investors saw this as a good buying opportunity and bought into several stocks. This is what pushed the market back up, to close just down 0.76 percent.”

All sectoral indices finished in the red on Tuesday led by mining and oil, down 2.18 percent.

More than 1.8 billion issues valued at P10.4 billion changed hands.

Losers led winners, 159 to 52, while 44 issues were unchanged.