Philippine Stock Falls as Inflation Concerns Rise, Peso-Dollar Rates Take a Hit

The Philippine Stock Exchange index (PSEi) ended the week on a negative note, shedding 0.54 percent, or 36.89 points, to close at 6,779.02 points on Friday, February 17. The decline in the local stock was largely attributed to inflation concerns and the central bank’s rate hiking path.

This sentiment was mirrored by the local currency as the peso-dollar rates took a hit.

All Shares also followed suit, declining by 0.48 percent, or 17.39 points, to 3,621.69 points. The day’s market performance was marked by most of the sectoral gauges finishing the day down, with Property taking the biggest hit after falling by 1.75 percent. Industrial trailed after slipping by 0.87 percent, along with Holding Firms, 0.83 percent, and Financials, 0.02 percent.

On the other hand, Services rose by 0.79 percent, and Mining and Oil by 0.04 percent. The volume of shares traded reached 851.14 million shares, amounting to PHP5.68 billion. The decliners led the advancers at 123 to 56, while 39 shares remained unchanged.

The negative market sentiment was largely due to concerns over rising inflation, which could lead to higher borrowing costs and dampen economic growth. This is why the central bank has already signaled its intention to raise interest rates to control inflation. A rising interest rate environment makes it more expensive for companies to borrow money, thus affecting their profits and share prices.

Moreover, the depreciation of the peso against the dollar also weighed on the stock market. A weaker peso makes imported goods more expensive, which could lead to higher inflation. It also makes the country’s exports cheaper, but it could also lead to higher costs for companies that rely on imported materials and equipment.

While there were a few bright spots in the market, the overall trend was negative due to concerns over inflation and interest rates. Investors will be watching closely as the central bank decides on its monetary policy in the coming weeks, as this will have a significant impact on the stock market’s performance. (GFB)