STOCKS climbed on Tuesday after the Bangko Sentral ng Pilipinas (BSP) chief on Monday said the Philippine economy can weather the adverse market impact of a tightening in the US Federal Reserve’s policy stance.
The Philippine Stock Exchange index (PSEi) gained 43.24 points or 0.63% to close at 6,870.41 on Tuesday, while the broader all shares index went up by 28.16 points or 0.67% to 4,182.90.
“Philippine shares followed the sentiment of their US counterparts after the Dow [Jones] booked its best day on a percentage basis since March after soaring by +1.76%. The S&P 500, +1.40%, likewise had its best day since May,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“Investor sentiment also likely got a lift [on Tuesday] following pronouncements from the BSP that the Fed’s accelerated timetable for raising interest rates will be less of a threat to the Philippines vis-a-vis other emerging economies,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.
Emerging markets could experience capital flight once the US Federal Reserve lifts interest rates in 2023, BSP Governor Benjamin E. Diokno said, who believes this is less of a threat to the Philippines compared with other economies.
“We have sound fundamentals — hefty GIR (gross international reserves), low debt-to-GDP (gross domestic product) ratio, sound and resilient banking system, and we have adopted structural reforms — that a Fed rate hike in 2023 is less of a threat to the Philippine economy compared to other developing and emerging economies,” Mr. Diokno said on Monday.
The Fed hinted last week that it may need to raise benchmark interest rates twice in 2023 as the US economy’s recovery picks up pace.
All sectoral indices posted gains on Tuesday except for financials, which declined by 4.38 points or 0.29% to close at 1,486.11.
Meanwhile, holding firms improved by 75.95 points or 1.11% to 6,915.89; industrials climbed by 101.30 points or 1.08% to finish at 9,420.38; property added 19.80 points or 0.59% to 3,351.88; mining and oil went up by 54.11 points or 0.58% to end at 9,257.13; and services gained 8.80 points or 0.56% to finish at 1,560.03.
Value turnover inched down to P5.22 billion with 2.55 billion issues traded on Tuesday, from the P5.86 billion with 2.43 billion shares that switched hands the previous day.
Advancers beat decliners, 122 against 69, while 53 names closed unchanged.
Foreigners turned sellers anew and logged P101.57 million in net outflows on Tuesday from the P238.45 million in net purchases seen on Monday.
“For [Wednesday], we may see the index try to push higher and possibly retest the 7,000 resistance; however, such an attempt is likely to be met with strong selling pressure,” China Bank Securities’ Mr. Mercado said. — K.C.G. Valmonte