PSEi falls 2.23% on rate hike concerns

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THE stock market plunged by more than two percent on Thursday, falling to the 7,600 level, as investors continued to pare their positions amid renewed fears of additional US interest rate hikes.

The benchmark Philippine Stock Exchange index (PSEi) lost 175.44 points or 2.23 percent to close at 7,694.12 while the broader All Shares dropped 76.06 points or 1.60 percent to 4,678.74.

Regina Capital Development Corp. President Marita Limlingan blamed foreign selling, with investors said to be shifting their attention to bond yields after the 10-year US treasury note hit a new peak of 3.1 percent on Wednesday, the first time since July 8, 2011.

Two-year Treasury notes similarly reached 2.593 percent, the highest since August 11, 2008.


Foreign funds bought P3.3 billion issues and sold P4.6 billion for a net foreign selling position of P1.3 billion.
Limlingan also noted that a last week’s Bangko Sentral ng Pilipinas’ (BSP) rate hike had put pressure on the peso, which remains one of the weakest currencies in the region.

“A peso with weakening prospects will be less attractive to investors who measure returns in dollars,” she said.
Timson Securities, Inc. trader Jervin de Celis also pointed to the rise in US bond yields as having figured in Thursday’s stock market plunge.

“This is due to the US retail sales [growth]report reaching 4.7 percent versus the 4.1 percent forecast. Since US retail sales is still going up, we can assume that the US economy is still picking up, so this means inflation may go higher. If inflation goes higher, interest rates will go up,” he said.

All sectoral indices fell on Thursday with property down the most by 3.10 percent.

Volume turnover reached 1.3 billion issues valued at P7.16 billion.

Losers outnumbered winners, 121 to 69, while 62 issues remained unchanged.

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