PSEi drops on inflation, Duterte rhetoric, Fed rate hike


PHILIPPINE share prices slid on Wednesday as the market caved in from the pressures of a Fed rate hike this year, while the latest slur of President Rodrigo Duterte against US President Barrack Obama and September inflation data added to the negative sentiment.

The PSEi lost 1.03 percent or 79.45 points at 7,639.79, while the All Shares declined by 0.85 percent or 38.74 points at 4,531.66.

Justino Calaycay Jr., head of research and marketing at A&A Securities Inc., noted the “heightening expectations of a rate hike by December” mainly dragged the market.

“The overnight influence wasn’t too rosy to begin with. US stocks retreated on heightened expectations of a rate hike by December,” Calaycay said.

The “Go to hell” rhetoric of Duterte against Obama added to the selling pressure.

“Besides, the way the market moved the previous day did raise concerns on the sustainability of the quarter-opening optimism. Specifically, the gains on Tuesday were marked by significantly lower value flows. That was a warning sign,” Calaycay said.

“Finally, yet another round a incendiary rhetoric from the President advising President Obama to ‘go to hell’ and thinking aloud before a forum that we might eventually pivot away from the US and towards China and Russia lays even more uncertainties to an already nervous market,” he added.

Federal Reserve officials have indicated that an interest rate hike in December, pointing out that the US economy is ripe for a rate increase.

Calaycay said the perception by multilateral lenders that the Philippines is a “potential outperformer” does not bode well with the current risks.

For his part, Anton Alfonso of RCBC Securities Inc. said the PSEi was influenced by the sell-off in PLDT Inc. and Globe Telecom Inc., while the official data inflation in September at 2.3 percent was nearly six times faster than the 0.4 percent a year earlier.

The September inflation was the highest in two years since March 2015 when inflation was at 2.4 percent.
At the close of Wednesday’s trading, more than 3.59 billion shares, valued at P6.49 billion, changed hands.
Decliners outnumbered advancers, 127 to 58, while 43 issues were unchanged.

On Tuesday, the PSEi increased by 0.54 percent or 41.51 points at 7,719.24, while the broader All Shares index rose by 0.24 percent or 10.92 points at 4,570.40.


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