INVESTORS mostly ignored a largely expected low inflation rate for May announced on Thursday, trimming their blue chip portfolios in favor of second- and third-tier stocks.
Philippine headline inflation eased further to 1.3 percent in May, a new six-year low, from 1.4 percent in April, as annual increases in utilities and transportation costs slowed, the Philippine Statistics Authority said on Thursday.
Luis Limlingan, managing director at Regina Capital and Development Corp., said the May inflation figure had a muted effect on market movement since it was within expectations.
In the coming days, market action will probably be influenced by other incoming economic data and developments related to US President Donald Trump’s trade war, Limlingan said.
Jonathan Ravelas, senior adviser at Reyes Tacandong and Co., noted the inflation report remains good news in general.
It means “prices are rising more slowly, which helps consumers, and can boost investor confidence.”
“Lower inflation often leads to lower interest rates, making it cheaper for businesses to borrow and invest,” Ravelas added.
Trading activity was moderate, with total value turnover reaching P6.31 billion on a volume of 912.5 million shares across 71,837 trades.
The PSEi shed 0.03 percent or 1.77 points to close at 6,376.79.
The broader All Shares gained 0.28 percent or 10.64 points to 3,779.22.
Foreign funds bought P2.75 billion worth of shares and sold P2.66 billion, for a net buying position of P85.99 million.
Market breadth was nearly even, with 100 advancers, 101 decliners, and 48 issues unchanged.
“Juan Paolo Colet, managing director at China Bank Capital Corp., said the low inflation print “should help the case for further policy rate cuts and a better consumption story moving forward.”
Low inflation and low interest rates are important for improving investor confidence, Colet said.
Investors may have also been weighing further the implications of the latest inflation figures and other economic indicators.
Analysts said that while cooling inflation is a positive sign, other factors such as global economic trends and domestic policy developments continue to influence market sentiment.
Stock brokerage SB Equities Inc. noted the PSEi picked up steam during the morning session before the selling pressure weighed on the benchmark PSEi.
Japhet Tantiangco, analyst at Philstocks Financial Inc., said the PSEi’s “marginal decline” is attributed mainly to the selling of index heavyweights such as SM Investments Corp., Manila Electric Co., and BDO Unibank Inc.
By sector, properties led gainers, with 1.11 percent, while banks lost 1.12 percent.
Both sectors were influenced by market expectations of policy easing by the Bangko Sentral ng Pilipinas on the heels of low inflation, Tantiangco said.
Most actively traded International Container Terminal Services Inc. declined P2 to P409. BDO Unibank Inc. dropped P1.60 to P155.80. Bloomberry Resorts Corp. lost P0.05 to P5. China Banking Corp. fell P6.60 to P65.70. Ayala Land Inc. gained P0.35 to P24.25. Aboitiz Power Corp. advanced P1.50 to P39.60. DigiPlus Interactive Corp. rose P2.80 to P62. Bank of the Philippine Islands was steady at P140. Converge ICT Solutions Inc. was up P0.70 at P21. SM Prime Holdings Inc. added P0.25 to P23.20.
