Share prices ended higher yesterday on continued bargain hunting.
The peso closed down.
The Philippine Stock Exchange index (PSEi) was up 112.8 points, a 1.67 percent hike to 6,850.64.
The broader all shares index was up 44.21 points to 3,625.08, a 1.23 percent hike.
Gainers edged losers 111 to 91 with 35 stocks unchanged. Trading turnover reached P8.89 billion.
The peso closed at 55.83 to the dollar, down from 55.825 on Monday.
The currency opened at 55.94 and hit a high of 55.82 and a low of 56.1. Trading turnover reached $1.02 billion.
Most Asian currencies weakened on Tuesday, a day after grim data from the world’s two biggest economies reignited worries about a global recession.
“Asian markets may range trade today as investors continue to digest the recent soft economic data coming out from both China and the US, and their implications for policy stimulus,” analysts at OCBC Bank wrote.
Luis Limlingan, managing director at Regina Capital and Development Corp., said funds looked for alternatives after the weaker view of China, helping the local stock market to go up.
“Recently economic reports have critiqued China and the unexpected cut in its benchmark rates. Locally, data continued to support the bargain hunting as the latest OFW remittances data indicated an increase of 4.4 percent ($2.76 billion),” he said.
Most actively traded Emperador Inc. was up P0.60 to P19.65. Ayala Land Inc. was up P1.10 to P30.20. SM Investments Corp. was up P20 to P800. BDO Unibank Inc. was up P5.40 to P125.40. SM Prime Holdings Inc. was up P0.05 to P38.15. Security Bank Corp. was up P5 to P92. Ayala Corp. was up P20 to P770. International Container Terminal Services Inc. was up P3.40 to P188. Semirara Mining and Power Corp. was up P1.45 to P44. Converge ICT Solutions Inc. was up P0.90 to P19.40.
A Reuters poll forecast said the Bangko Sentral ng Pilipinas (BSP) will follow its surprise July rate hike with a half-point point rise today and another quarter-point increase in September to catch up with its peers in containing soaring inflation, Driven by higher transport and food prices, inflation in the Philippines accelerated to 6.4 percent in July, its fastest pace in nearly four years, pushing the central bank to tighten monetary policy at a faster pace.
The BSP followed two modest quarter-point rate rises so far in this cycle with a hefty unscheduled 75 basis point rise on July 14, its most aggressive since the central bank shifted to an inflation-targeting approach in 2002.
The Aug. 8-15 Reuters poll showed nearly 70 percent of economists, 11 of 16, forecast the BSP would hike its key overnight reverse repurchase facility rate by another 50 basis points to 3.75 percent at its Aug. 18 meeting. Four expected a 25 basis point hike, while one said no change.
A strong 60 percent majority of economists, 10 of 16, forecast another 25 basis points hike at the September meeting, taking rates to 4 percent, where they were before the pandemic.
Seven economists forecast rates to reach 4.25 percent or higher by end-2022. Six expected rates to reach 4.00 percent, while the remaining three said 3.75 percent or lower.
“Governor (Felipe) Medalla has stated that a 25 or a 50 bp hike is likely in August, and we think higher-than-expected inflation suggests that the BSP will take the faster approach,” noted Shreya Sodhani, research analyst at Barclays.
“This would also be consistent with the BSP’s commitment to do more to get inflation in line with its target range, as it showed with the large frontloaded hike in July.”
Price pressures are widely expected to remain elevated in the coming months and a weaker peso, which has already fallen 9 percent this year, has further worsened the outlook through imported inflation.
Inflation was not forecast to fall within the target range of 2 percent-4 percent until mid-2023, according to a separate Reuters poll taken in July, largely in line with the central bank’s projection.
Last month, the central bank chief ruled out another surprise move on rates, signaling the next move would be smaller than the 75 basis points delivered in July.
Although annual growth slowed from 8.2 percent in the first quarter to 7.4 percent in the last one, it was still the second-fastest so far in Asia, giving the central bank room for further tightening.
BSP has raised rates by 125 basis points since May. — Reuters