PSEi falls to lowest level since 2022

The Philippine Stock Exchange Index (PSEi) plunged 2.07 percent to 5,806.81 points on Monday, marking its lowest close in three years.

The last time the local bourse traded at this level was in September 2022, when the index dropped to 5,741.07 amid fears of a global recession, rapid US Federal Reserve rate hikes, and a weakening peso.

The current decline evokes that same period of uncertainty.

Back in 2022, the Fed’s aggressive monetary tightening triggered a worldwide sell-off, prompting foreign investors to flee emerging markets like the Philippines.

The peso tumbled to a record low of P59 against the US dollar, stoking imported inflation and tightening liquidity.

Domestic inflation soared above six percent, squeezing consumer spending and corporate earnings while the Bangko Sentral ng Pilipinas (BSP) was forced to follow with its own rate hikes.

Combined pressures

Those combined pressures sent the PSEi to its lowest point in more than two years at the time.

Today’s market weakness, analysts say, reflects renewed investor caution under similar conditions — a soft peso, inflationary pressures, and global monetary policy uncertainty.

The benchmark index shed 101.62 points, or 1.71 percent, to 5,828.06, erasing early-session gains and returning to levels last seen in October 2022.

Trading near levels at the height of the pandemic

On a valuation basis, the PSEi is now trading near levels observed during the height of the pandemic in 2020 — underscoring how fragile investor sentiment has become.

Banking stocks led the decline, as traders positioned defensively ahead of key macroeconomic data due later this week. The Services sector managed to pare some losses but could not offset the broad market downturn.

Trading activity surged, with over 802 million shares changing hands valued at P9.8 billion. Market breadth turned sharply negative — 134 losers against 56 gainers, while 62 issues were unchanged — signaling widespread risk aversion.

Risk-off positioning

Market analysts attributed the slump to “risk-off” positioning ahead of the release of October inflation and third-quarter GDP figures.

Persistent concerns over government underspending, weak business confidence, and corruption-related issues have further dampened sentiment.

Expectations that October inflation will rise from September’s 1.7 percent have also heightened caution, adding to fears that the BSP may have limited room to ease policy soon.

Global cues remain a key driver

Global cues remain a key driver. Recent remarks from U.S. Federal Reserve officials indicated uncertainty over another rate cut in December, even after the reduction announced on 29 October. The ambiguity has kept markets on edge, as the BSP’s next moves will likely hinge on the Fed’s stance to maintain interest rate differentials.

Meanwhile, the peso’s position near P58.70 to the dollar continues to exert pressure on the market. A stronger greenback raises import costs and could push inflation higher in the coming months — echoing the same currency strain that weighed heavily on the market during the 2022 downturn.

Investors are closely monitoring corporate developments, especially the P34.3-billion Maynilad Water IPO, scheduled for listing this Friday, 7 November after the close of its offer period.