The market was in mild confusion during the Friday session with investors weighing negative sentiment on higher interest rates announced by the Bangko Sentral ng Pilipinas (BSP) on Thursday, as well as the upcoming rebalancing of the local bourse.
The BSP’s Monetary Board raised its benchmark interest rates and special deposit accounts (SDA) rates by 25 basis points in its policy-setting meeting on Thursday.
The main Philippine Stock Exchange index (PSEi) lingered in positive territory for much of the session but ended little changed, with a slight negative bias, failing to reverse losses in the past three trading days.
The benchmark stock index lost 0.003 percent or 0.18 points to close at 7,201.88, while the wider All Shares index gained a slight 0.07 percent or 2.99 points at 4,259.69.
Joyce Anne Ramos of AB Capital Securities Inc. said the market’s behavior was “confused during the day on how to price-in the recent rate hike of the BSP and the rebalancing of the PSEi.”
The rebalancing of the stock index will take effect on Monday, September 15.
“The interest rate hike is generally seen as bearish to equities, although there is a major support found at 7,200,” Ramos explained.
Miguel Agarao of Wealth Securities Inc., like Ramos, said the market mostly reacted to the BSP rate hike and the PSEi rebalancing, and opted for consolidation at Friday’s market close.
“The market was mainly sideways on international markets, [and will be]even for the coming weeks unless there are new catalysts,” Agarao said.
Wall Street ended mixed overnight, with the Dow Jones Industrial Average declining 19.71 points while both the S&P 500 and the Nasdaq posted minor gains.
“For now, the market will be subscribing to foreign leads in the next few weeks. If China and US [markets]perform well in the coming weeks, I think the market will be going into its new all-time high,” Agarao added.
The sector indices were mixed, with none posting a significant gain or loss. Mining and oil increased 0.06 percent or 11.34 points to 17,937.98, industrials advanced 0.35 percent or 39.30 points to 11,161.83, and financials finished up 0.63 percent or 10.53 points at 1,684.78. Services slipped 0.28 percent or 6.27 points to 2,217.53, holding firms were off 0.22 percent or 13.79 points at 6,322.86, and property was lower at the close by 0.06 percent or 1.65 points at 2,726.75.
Actively traded stocks were also mixed, with decliners including Philippine Long Distance Telephone Company, Emperador, Ayala Land, Alliance Global Group, and Philex Mining Corp.; while Bank of the Philippine Islands, BDO Unibank, Universal Robina Corp., Jollibee Foods Corp., and Ayala Corp. posted gains.
Total volume was at 1.685 billion shares, valued at P7.16 billion. Gainers slightly outnumbered losers, 86 to 82, while 51 issues were unchanged.
Given the market is in consolidation and sideways movement, Agarao said it will trade within the 7,100 to 7,300 range in the next few weeks.
“The BSP rate hike is seen as a good thing, actually. The market is performing strong, and is seen to go up by year-end” after the medium term consolidation phase in September to October, Agarao said.
He added the PSEi may possibly go beyond 7,400 to hit a new high sometime in November on corporate Q3 earnings results or in December due to the yuletide season.
On Thursday, the main PSEi was also in the green for most of the day before it dipped by 0.15 percent or 10.72 points the last minute, ending at 7,202.06. Conversely, the All Shares increased by 0.04 percent or 1.55 points to 4,256.70.