Index unchanged; Prices in spotlight

August 11, 2022

The local market eked out small gains as investors brace for the upcoming US inflation report, which could confirm or dash hopes that rising prices have leveled off. Economists expect the report to show that inflation has cooled slightly, led by slipping oil prices.

For the 3rd straight day, the market went up due to last-minute bargain hunting while investors await the inflation rate in the US.

The Philippine Stock Exchange index closed at 6,471.84, 2.87 points higher on turnover of P6.33 billion.

Investors eye the inflation print in the US as it may tell how aggressive would the Federal Reserve be regarding its monetary tightening which may influence the decision of the Bangko Sentral ng Pilipinas (BSP) at their next policy meeting.

Crude oil prices declined on choppy trading as worries that a slowing economy could cut demand vied with news that some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine, Regina Capital Development Corp. managing director Luis Limlingan said.

Brent crude closed at $96.31 per barrel (/bbl), down 0.4 percent. On the other hand, US West Texas Intermediate crude shed 0.3 percent at $90.5/bbl.

FDI rises 64%

Local data remained favorable as foreign direct investments (FDI) were shown to sustain their net inflows in May 2022, recording a 64.1 percent expansion year-on-year to $742 million from $452 million a year ago.

Data from BSP showed on a cumulative basis, FDI net inflows for January to May rose by 18.8 percent to $4.2 billion from the $3.5 billion net inflows posted in the same period last year.

“The year-to-date growth was mainly on account of the increase in non-residents’ net investments in debt instruments, which muted the decline in net equity capital placements (other than reinvestment of earnings),” the central bank said.

The BSP added that in May 2022, FDI grew following net inflows from non-residents’ net investments in debt instruments and equity capital of their local affiliates.

“By country of source, equity capital placements came largely from Japan, the United States, Singapore and the Netherlands. These were invested mostly in the: manufacturing; real estate; information and communication; and, transportation and storage industries,” it added.

Michael Enriquez, president and chief investment officer of Sun Life Investment Management and Trust Corp. said “we have seen continued investments flowing into debt instruments particularly government securities as interest rates continue to adjust higher.”

“Also, we have seen inflows in some equity securities participating in placements and taking advantage of the lower prices,” he added.


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