PHL shares decline as Fed delivers big rate hike


SHARES declined on Thursday after the US Federal Reserve delivered another jumbo rate hike, with the Bangko Sentral ng Pilipinas (BSP) expected to match the move at its own meeting this month.

The Philippine Stock Exchange index (PSEi) went down by 50.13 points or 0.8% to end at 6,156.11 on Thursday, while the broader all shares index declined by 19.18 points or 0.58% to close at 3,257.83. 

Philstocks Financial, Inc. Research Analyst Claire T. Alviar said PSEi went down following the Fed’s move to hike borrowing costs. 

“Along with other markets, the main index dropped after the Fed raised interest rates by 75 basis points (bps) while hinting to do more ahead,” Ms. Alviar said in a Viber message on Thursday.

“Initially, the Fed’s rate hike weakens the peso if the BSP will not go point-by-point. However, aggressive rate hikes may come at the expense of our economic growth. This scenario worries investors,” Ms. Alviar added.

The US central bank delivered a fourth consecutive 75-bp hike on Wednesday to fight inflation, bringing the fed funds rate to a level within 3.75-4%. The move brought cumulative increases since March to 375 bps.

BSP Governor Felipe M. Medalla on Thursday said the Monetary Board will increase benchmark interest rates by 75 bps at its Nov. 17 meeting to match the Fed as it seeks to stabilize prices.

“Philippine shares and the rest of the region softened following the Fed’s delivery of another 75-bp interest rate adjustment. Initially, the indices were up during the day, but gains were reversed when Fed Chair Jerome Powell said it was ‘premature’ to talk about a rate hike pause and that the terminal rate would likely be higher than previously stated,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The majority of sectoral indices ended lower on Thursday, except for mining and oil, which climbed by 191.15 points or 1.95% to 9,954.72 and services, which went up by 19.91 points or 1.27% to 1,584.45.

Meanwhile, holding firms went down by 104.50 points or 1.73% to 5,918.91; industrials declined by 92.27 points or 1.02% to 8,884.77; property lost 20.12 points or 0.75% to end at 2,643.73; and financials dropped by 9.11 points or 0.57% to 1,585.93.

Value turnover declined to P4.45 billion on Thursday with 430.75 million shares changing hands from the P6.29 billion with 496.31 million issues traded on Wednesday. 

Decliners outnumbered advancers, 114 versus 61, while 37 names closed unchanged.

Net foreign selling stood at P74.71 million on Thursday versus the P580.99 million in net buying seen on Wednesday.

Mr. Limlingan said investors will monitor Philippine October inflation data to be released on Friday for leads, as well as the US nonfarm payrolls report.

The BSP on Monday said headline inflation could have settled at 7.1% to 7.9% in October, driven by rising food prices, higher transport fares and the peso’s depreciation. — Ashley Erika O. Jose