Philippine Daily Inquirer


- By Doris Dum­lao-Abadilla @Philbizwat­cher

The lo­cal stock barom­e­ter re­turned to the dol­drums yes­ter­day as in­vestors were un­nerved by news about the coun­try’s high­erthan-ex­pected June in­fla­tion rate against the back­drop of mostly slug­gish re­gional mar­kets.

End­ing a four-day re­bound, the Philip­pine Stock Ex­change in­dex (PSEi) shed 114.85 points or 1.56 per­cent to close at 7,233.57.

It was re­ported that the coun­try’s year-on-year in­fla­tion rate in June surged to a five-year high of 5.2 per­cent from 4.6 per­cent in May. This ex­ceeded the con­sen­sus fore­cast of 4.8 per­cent and even the Bangko Sen­tral ng Pilip­inas’ pro­jected range of 4.3-5.1 per­cent for the month.

“The high in­fla­tion point for June would likely re­quire fur­ther mon­e­tary pol­icy re­sponse as early as the Au­gust meet­ing. Real pol­icy rate is deeper in the red in­di­cat­ing that a more ag­gres­sive eco­nomic pol­icy re­sponse would be needed. Real pol­icy rate is now -1.7 per­cent from only -0.4 per­cent in Jan­uary,” ING Philip­pines econ­o­mist Joey Cuyegkeng said.

Ja­panese in­vest­ment house No­mura said Philip­pine in­fla­tion might peak in Au­gust or Septem­ber, be­fore grad­u­ally eas­ing from there.

“We be­lieve the risks around our con­sumer price in­dex fore­cast may now be tilted more to the up­side be­cause of up­com­ing sup­ply­side fac­tors, such as im­pend­ing in­creases in power rates and the im­pact of a higher coal tax. Im­por­tantly, core in­fla­tion may rise fur­ther as the out­put gap be­comes more pos­i­tive,” No­mura said.

“We be­lieve in­fla­tion ex­pec­ta­tions are also likely to rise fur­ther, as ev­i­dent in ris­ing de­mand for wage in­creases. As such, we also see now some risk that BSP may de­liver ad­di­tional rate hikes this year, tak­ing the pol­icy rate above our 3.75 per­cent fore­cast,” it added.

At the PSE, all coun­ters ended in the red, led by hold­ing firms which slid by 2.09 per­cent. The fi­nan­cial and in­dus­trial coun­ters fell by over 1 per­cent.

Value turnover for the day reached P5.2 bil­lion. For­eign­ers re­sumed dump­ing lo­cal eq­ui­ties re­sult­ing in net for­eign out­flows of P525 mil­lion for the day.

There were 113 de­clin­ers and 75 ad­vancers while 60 stocks were un­changed.

The PSEi was weighed down most by the largest con­glom­er­ate SM In­vest­ments and Metrobank, which both fell by nearly 4 per­cent.

URC, Jol­libee and Me­ga­world all de­clined by over 2 per­cent, while Ayala Land, BPI, Ayala Corp., Metro Pa­cific and PLDT all lost over 1 per­cent.

Shares of BDO, GT Cap­i­tal, ICTSI and First Gen also de­clined.

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