Philippine stocks down on worries over China, US rates

MANILA, Philippines — The Philippine stock market sank yesterday amid lingering concerns that the US Federal Reserve could raise interest rates.

The benchmark Philippine Stock Exchange Composite index (PSEi) closing at 6,364.97, down by 45.12 points or 0.70 percent. The broader All Shares index slipped to 3,409.80, down by 16.61 points or 0.48 percent.

Most of the gauges were down except for the services index.

Total value turnover stood at P4.916 billion and market breadth was negative, 95 to 74 while 62 issues were unchanged.

Mikhail Plopenio of Philstocks Financials attributed the market’s decline to negative spillovers from Wall Street overnight amid hawkish statements from the Federal Reserve, which hinted that further monetary tightening could be necessary amid perceived inflationary risks.

“Higher inflation expectations following BSP Deputy Governor Francisco Dakila Jr.’s statement that the BSP may raise their inflation forecast (which it has actually done in the latest policy meeting), and mounting growth projection downgrades for the Philippine economy also weighed on sentiment,” Plopenio said.

Meanwhile, Asian shares plummeted to nine-month lows yesterday, while the dollar was at a two-month peak as fears over China’s sluggish economic recovery and concerns that the Federal Reserve may still raise interest rates rattled investors.

China stocks have been in the doldrums in the past few weeks as a series of economic data has laid bare the stuttering post-pandemic recovery, with investors so far unimpressed with moves from policymakers and clamouring for more stimulus.

Adding to the worrying landscape for the world’s second biggest economy is the deepening property sector crisis. Zhongzhi Enterprise Group on Thursday told investors it is facing a liquidity crisis and will conduct a debt restructuring, according to video footage of a meeting.

Wall Street ended lower after minutes from the Fed’s July meeting showed officials were divided over the need for more interest rate hikes.

“Some participants” cited the risks to the economy of pushing rates too far even as “most” policymakers continued to prioritise the battle against inflation, the minutes showed.