Profit taking snaps PHL shares’ two-day climb
PHILIPPINE STOCKS dropped on Wednesday, snapping their two-day climb, on profit taking and amid fears that an early rate cut by the Bangko Sentral ng Pilipinas (BSP) would put pressure on the peso.
The bellwether Philippine Stock Exchange index (PSEi) fell by 1.02% or 67.31 points to close at 6,489.35 on Wednesday, while the broader all shares index declined by 0.79% or 28.20 points to end at 3,510.04.
“The local bourse dropped due to profit taking after two consecutive days of market rally,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.
“Moreover, although the BSP’s rate cut in August was highly anticipated by investors, the possibility that the rate cut may lead to further weakness of the peso to below P59 against the dollar negatively affected sentiment,” Ms. Alviar said.
The peso may breach its record low of P59-per-dollar and even hit he P60 mark if the Philippine central bank cuts rates as early as August, Fitch Solutions’ unit BMI said on Tuesday.
BSP Governor Eli M. Remolona, Jr. has said the central bank could deliver its first rate cut in over three years by next month as they expect inflation to continue easing this semester.
The BSP last month kept its policy rate at a 17-year high of 6.5% for a sixth straight meeting after raising interest rates by a cumulative 450 basis points from May 2022 to October 2023.
The local unit hit its record low of P59 against the dollar in October 2022. It has been trading at the P58-per-dollar range since May as the US Federal Reserve said it could keep rates higher for longer due to sticky inflation in the world’s largest economy.
On Wednesday, the local unit closed at P58.32 per dollar, strengthening by 12 centavos from its P58.44 finish on Tuesday, Bankers Association of the Philippines data showed. This was the peso’s best finish in more than a month or since its P57.97 close on May 28.
“Philippine shares took a breather, slipping below the 6,500 level, following Wall Street’s mixed results,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
All sectoral indices closed lower on Wednesday. Industrials fell by 1.64% or 150.67 to 9,021.85; mining and oil went down by 1.55% or 133.77 points to 8,461.99; property shed 1.02% or 26.29 points to end at 2,541.66; services dropped by 0.92% or 18.80 points to 2,010.81; holding firms retreated by 0.86% or 48 points to 5,531.54; and financials decreased by 0.51% or 10.31 points to 1,992.99.
Value turnover declined to P6.22 billion on Wednesday with 413.15 million shares changing hands from the P6.74 billion with 767.99 million issues traded on Tuesday.
Decliners overwhelmed advancers, 111 versus 62, while 62 names closed unchanged.
Net foreign selling increased to P202.79 million from P16.77 million on Tuesday. — A.E.O. Jose