PSEi falls 0.88% as BSP delivers larger-than-expected 50-bp rate hike
Philippine shares closed the week lower and may stay under pressure as investors absorb the Bangko Sentral ng Pilipinas' larger-than-expected 50-basis-point rate hike, the first increase of that size since February 2023. The Philippine Stock Exchange index fell 0.88%, or 51.10 points, to 5,728.63 on Friday, while the all shares index dropped 0.86%, or 27.67 points, to 3,193.29. Week on week, the PSEi lost 54.07 points from its 5,782.70 close on 16 October.
"Headwinds have intensified in the past week, causing the local market to decline," Philstocks Financial research manager Japhet Louis O. Tantiangco said. He said investors kept locking in profits while the BSP's 50-bp move weighed on sentiment. The Monetary Board's Thursday decision was its fourth straight tightening this year and brought cumulative increases since April to 125 bps. COL Financial research analyst Denise Joaquin said the weakness may have spilled over into GCash, the ticker for Mynt, which closed below its offer price at the end of the week.
Tantiangco expects the bearish tone to persist, arguing the outsized hike signals the BSP sees persistently elevated inflation and has flagged further tightening. He said the rise in interest rates and the hawkish policy outlook is expected to weigh on the local market moving forward. The peso closed at record lows for five straight sessions, ending Friday at P63.615, down 9.5 centavos, after touching an intraday low of P63.62.
Oil is another risk. Tantiangco said crude prices are rising again on reports that the US and Israel plan to attack Iran after the midterm elections, and that a sustained climb would add to inflation pressure on the bourse. He sees the PSEi trading between 5,600 and 5,800, and said Philippine shares remain cheap on fundamentals but a sustained recovery will be hard without a positive catalyst.
Joaquin said investors will stay selective while awaiting more third-quarter corporate results, with attention abroad turning to the Fed's policy decision, where consensus expects a pause in October.
