Share prices decline for 3rd straight day as BSP turns hawkish

Share prices declined for a third straight session yesterday amid growing worries over inflation, which forced the central bank to deliver an aggressive, off-cycle interest rate hike.

The benchmark Philippine Stock Exdown 7.24 points or 0.12 percent, while change index (PSEi) finished at 6,248.13, the broader All Shares gauge was down 7.57 points or 0.22 percent.

Trading was still tepid with net value turnover at P4.81 billion, below the year-to-date average of P6.5 billion. Foreigners were net sellers with net outflows amounting to P826.86 million.

Japhet Tantiangco of Philstocks Financial said the local bourse declined yesterday amid worries over the further acceleration of US inflation – which hit a scorching 9.1 percent pace in June – and the possibility of a more aggressive policy response by the Federal Reserve.

Investors also digested the surprise policy rate hike by the Bangko Sentral ng Pilipinas.

The market fell to as low as 6,166.61, down by 1.42 percent intraday, but lastminute bargain hunting trimmed the market’s losses, Tantiangco said.

Emperador Inc. was the top index gainer, jumping 3.9 percent following its successful listing at the Singapore Stock Exchange yesterday.

In other Asian markets, stocks rose after higher US inflation stoked expectations of more rate hikes that investors worry will chill economic growth.

Investors worry aggressive action by the Fed and other central banks to cool inflation that is at four-decade highs might derail global growth.

“Growth fears are hitting the markets harder than inflation concerns,” said Stephen Innes of SPI Asset Management in a report.

The Federal Reserve and central banks in Britain, South Korea and some other countries have hiked rates to cool surging prices. The European Central Bank has similar plans.

Traders expect another Fed rate hike this month, probably matching last month’s 0.75-percentage-point rise, the biggest in 28 years and three times the usual margin.