Financial markets sink on inflation, oil price worries

The Philippine stock market was a world in turmoil yesterday, with the index slipping way below bear territory as most investors are now getting increasingly impatient over the still unabated monster inflation in the country.

The benchmark Philippine Stock Exchange index (PSEi) went on a tailspin to close at 7,132.36, down 89.72 points or 1.24 percent as did the broader All Shares index which lost 43.29 points or 0.97 percent to finish at 4,398.80.

This was below the bear market territory of 7,250 or the 20 percent decline mark from the index’s all-time high of 9,058.62 on Jan. 29.

At yesterday’s trading at the Bankers Association of the Philippines, the peso shed 14 centavos to close at 54.25 from Monday’s 54.11 on concerns about the elevated consumer prices as inflation is expected to breach the two to four percent target of the Bangko Sentral ng Pilipinas (BSP) until next year. The local currency opened weaker at 54.18 and hit an intraday low of 54.29 in mid afternoon trade before recovering to close at 54.25. Volume jumped by 70 percent to $655.4 million from $385.7 million.

Analysts said investor concerns on inflation are persisting.

“Inflation worries are getting louder and continue to hound the local market. Most are waiting for the inflation results this week,” said Astro del Castillo, managing director at First Grade Finance Inc.

Inflation could reach another fresh nine-year high of 6.8 percent in September from 6.4 percent in August, monetary authorities said.

The verdict will be out on Friday as the National Statistics