Share prices ended lower Wednesday tracking overseas leads as regional markets reeled from the impact of the higher than expected inflation figure in the US for August.
The peso closed down.
Online stockbroker Colfinancial.com advised investors to pick up stocks in market dips in preparation for the bourse’s eventual recovery.
Overnight, the US reportedt its August headline inflation spiked to 8.3 percent, disappointing pundits expecting a cooldown of prices, enough to soften the US Fed’s hawkish monetary stance moving forward.
The Philippine Stock Exchange index was down 118.95 points, a 1.77 percent drop to 6,582.86.
The broader All Shares index was down 45.62 points or 1.21 percent to 3,497.21.
Losers edged gainers 137 to 41 with 46 stocks unchanged. Trading turnover reached P5.28 billion.
The peso closed at 57.11 to the dollar, down from 56.77 on Tuesday. The currency opened at 57.10, hitting a high of 57 and a low of 57.27. Trading turnover reached $989.9 million.
Currencies and shares in Asia’s emerging markets fell sharply on Wednesday, as the dollar advanced after a hotter-than-expected US inflation report fuelled bets that Federal Reserve rates may have to be raised higher for longer, Reuters reported.
Luis Limlingan, managing director at Regina Capital and Development Corp., said the same worse than expects inflation print in August caused the rout of the local stock market, tracking overseas leads.
“A hotter-than-expected CPI report sent the Philippine along with all major regional indices on a selldown,” Limlingan said.
Most actively traded SM Prime Holdings Inc. was down P0.50 to P36.50. International Container Terminal Services Inc. was down P1.50 to P185.70. San Miguel Corp. was down P3 to P95. Ayala Land Inc. was down P0.10 to P28.40. BDO Unibank Inc. was down P4.80 to P125.10. SM Investments Corp. was down P25 to P859.50. Universal Robina Corp. was down P0.90 to P125.50. Monde Nissin Corp. was down P0.50 to P2.29. AbaCore Capital Holdings Inc. was down P0.05 to P2.29. PLDT Inc. was down P40 to P1,660.
Colfinancial.com in a report said the stock market’s recovery will be driven by the decline in inflation, noting “signs” point to peaking of inflation.
“Although commodity prices increased last month, casting doubts on the sustainability of their downtrend, commodity prices are once again falling with prices of some commodities now below their July lows. For example, after hitting a high of $97 per barrel last month, oil is now trading below $87 per barrel,” it said in an investors’ note.
“Moreover, most global central banks, including the BSP (Bangko Sentral ng Pilipinas), continue to raise interest rates. Consequently, the argument that weaker global economic growth outlook will lead to lower inflation still holds. This in turn should inevitably lead to lower interest rates, which is why the recent recover in the 10-year bond rate is not sustainable,” it added.
Colfinancial.com said foreign investors are slowly returning to Southeast Asian markets, with the Philippine Stock Exchange recording a net buy of P1.4 billion in September after a consistent net foreign selling since March.
“Foreign investors are turning bullish on Southeast Asia due to the reopening of its economies, leading to booming domestic demand, helping shield them from global economic headwinds. Investors’ positive view on Southeast Asian markets is also due to the low weighting of tech stocks which are currently out of favor, and the large weighting of banks which are beneficiaries of rising rates,” it said.
“Finally, valuations remain attractive. Almost all stocks continue to trade below their historical average valuation multiples – P/E (price earnings) ratio, P/BV (price to book value) ratio. Although earnings face downside risk due to the numerous challenges facing the economy, these are largely priced in given stocks’ depressed valuations,” it added.
Colfinancial.com said banks and consumer companies could lead the market’s rebound once it recovers from the correction.
“Philippine banks enjoyed higher demand for loans, higher net interest margins and lower provisions, while consumer companies led by restaurants and retailers benefited from a strong rebound in sales, which more than offset the negative impact of higher costs,” it said.
