PSE index drops below 8,000 ahead of BSP meet

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LOCAL EQUITIES edged lower on Wednesday, as foreign investors sold index heavyweights ahead of the local central bank’s policy meeting on Thursday.

The 30-company Philippine Stock Exchange index (PSEi) dropped 1.86% or 150.53 points to close at 7,909.07, its lowest since the market closed at 7,906.60 last Aug. 1, 2017. The broader all-shares index also shed 1.22% or 59.43 points to 4,789.06.

“Today, net foreign selling was around P1.5 billion, and foreigners are selling the index heavyweights — Ayala Land, Inc., Ayala Corp. (AC), SM Investments Corp., BDO Unibank [Inc.], and BPI (Bank of the Philippine Islands). Foreigners are likely taking bets off the table ahead the BSP’s meeting,” RCBC Securities, Inc. equity analyst Jeffrey Lucero said via text on Wednesday.

Investors continued to sell shares in AC after Mitsubishi Corp. unloaded 8.5 million shares in the company on Tuesday. Shares in the conglomerate dipped 2.24% to P916 each on Wednesday.

The Bangko Sentral ng Pilipinas (BSP) will review its policy settings today, where analysts expect interest rates to be unchanged.

“As above-trend growth leads to a continued tightening in capacity utilization and inflation clears the upper end of the BSP’s inflation target band, our expectation is that the BSP will normalize policy by hiking policy rates, beginning May or June 2018,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said.

International markets defied the PSEi’s performance, as Wall Street recovered on Tuesday. The Dow Jones Industrial Average picked up 0.47% or 116.36 points to 24,727.27; the S&P 500 gained 0.15% or 4.02 points to 2,716.94; while the Nasdaq Composite index rose 0.27% or 20.06 points to 7,364.40.

The increase came amid the US Federal Reserve Open Market Committee (FOMC)’s two-day policy meeting, where the body is expected to hike rates for the first time in 2017.

Asian indices had mixed results on Wednesday, as investors are uncertain of what to expect from the FOMC policy meet.

Four sectoral indices were in negative territory, led by property which declined 2.32% or 84.51 points to 3,550.99. Holding firms declined 2.26% or 182.17 points to 7,858.18; financials ended 1.96% or 41.48 points lower to 2,069.38; while industrials dipped 0.43% or 48.57 points to 11,226.78.

On the other hand, mining and oil gained 1.8% or 189.59 points to 10,691.20, while services had a minimal increase of 0.01% or 0.32 point to 1,672.20.

Some 2.07 billion issues switched hands resulting in a value turnover of P9.52 billion, lower than Tuesday’s P18.54-billion turnover.  Decliners outpaced advancers, 139 to 85, while 41 issues remained unchanged. Net foreign selling persisted, although declining to P1.51 billion from Tuesday’s P3.84-billion outflow.

Mr. Limlingan said that trading is likely to be muted for the rest of the week, with a resistance of up 8,200.  — Arra B. Francia