Stocks in bear territory after BSP rate hike
LOCAL shares entered bear territory in early trading on Thursday after the Monetary Board’s decision to hike key rates surprised investors.
At the midday break, the bellwether Philippine Stock Exchange index was down 127.21 points or 1.75 percent at 7,134.41, or a decline of 21 percent from its peak this year at 9,058.62 points, hit on January 29.
The wider All Shares fell 68.17 points or 1.53 percent to 4,392.05.
“Market participants were primarily surprised at the June rate hike because most of the consensus pointed to a later date, like August or September, so there’s some selling pressure because of that because interest rates have gone up,” Regina Capital Development Corp. equity analyst Renz Cruz said in a phone interview.
“At the same time, it has been going down for a while already because the market has been weak already from year to date, so this is like a correction in the market [which]was anticipated long before,” he added.
On Wednesday, the Bangko Sentral ng Pilipinas’ policymaking body raised its benchmark rates by 25 basis points in a move to address rising inflation. The rate hike brought the BSP’s overnight borrowing rate to 3.50 percent, overnight lending to 4 percent, and deposit rate to 3.25 percent.
This is the second round of rate adjustments by the BSP following a similar 25-basis- point rate increase last May 2.
All sectors were in the red led by services, down 2.30 percent. ANGELICA BALLESTEROS
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