Philippine stocks slide further into bear territory despite rate hike

MANILA, Philippines — Local stocks sank deeper into bear territory on Thursday despite the Bangko Sentral ng Pilipinas’ decision to tighten monetary policy settings for the second time to contain inflation and capital outflow.

The Philippine Stock Exchange index—a barometer of investor confidence—ended a bearish trading after it dropped 2.25 percent or 163.47 points to 7,098.15.

The local bourse has sagged by more than 20 percent since hitting an all-time high of 9,058.62 on Jan. 29, 2018. The drop marked its entry into the bear market territory.

Meanwhile, the broader all shares index on Thursday also declined 2.04 percent or 91.01 points to close at 4,369.21, while all sectoral counters retreated led by the property sub-index.

Net foreign outflows jumped to P2.27 billion, higher than Wednesday’s P772.56 million.

“The reaction to the needed BSP rate hike was still not taken positively as the decision came behind the curve as indicated by the continued meltdown of the PSEi well within the bear market territory,” Luis Limlingan of Regina Capital said in a market commentary.

“We were expecting the BSP to wait to hike in August, but policymakers may have opted to act sooner given upside risks to already-above-target inflation in coming months and the further depreciation in the peso (one of the worst-performing currencies in Asia) since early June,” he added.

At its fourth policy review for the year last Wednesday, the BSP’s monetary board decided to hike policy settings by another 25 basis points following a similar move last May.

The central bank also struck a more hawkish tone, saying monetary authorities won’t think twice to “take further policy action as needed” to ensure price stability. 

READ: BSP lifts policy rates anew to counter rising commodity prices

“For now at least, policymakers appear to want to keep their options open as they assess the incoming data,” Limlingan said. “We are looking at the possibility of another rate hike but possibly in the September 27 meeting.”