Stock market up 1.8% despite jitters

The Philippine Stock Exchange Index (PSEi) climbed 1.8 percent on Friday, closing 127.11 points higher at 7,193.68 from 7,066.67 the previous day, with the broader all-shares index rising by 1.61 percent.

All sub-indices are on the green zone, with the property shares gaining 3.05 percent from last day’s trade.

The PSEi is officially on bear territory after dropping more than 20 percent from its peak in January. Economists said the looming trade war between the U.S. and China is adding pressure on the local bourse which fell 16 percent year-to-date.

A total of 80,542 trades capped the month with winners beating the losers, 120 to 82, while 43 corporations were unchanged.

Ayala Land, Inc. (ALI) and SM Prime Holdings, Inc. were the most actively traded stocks but only ALI breached the 600-million-peso value.

However, the bourse lost 9.85 percent at the close of the second quarter, slipping 847.11 points from 7,979.83 last March 28, the previous trading day of the first quarter.

The services and finance sectors posted the biggest drops in all sectoral indices in the last quarter, slipping 16.56 percent and 14.8 percent, respectively. Only the properties space settled under the nine-percent mark, losing only 3.13 percent for three months.

The skid mirrors the slump on the Asian markets caused by the trade war, as well as uncertainties in Mexico and the European Union markets.

Meanwhile, BMI Research, the think tank unit of credit ratings firm Fitch Group, said it expects the Bangko Sentral ng Pilipinas (BSP) to implement a new round of policy interest rates hike before the end of this year, forecasting the overnight reverse repurchase (RRP) rate to settle at 3.75 percent from the current 3.50 percent.

BMI Research made the prediction as it described the current BSP interest rate as “too low” to propel the country’s gross domestic product upward.

“In our view, the interest rate is too low for an economy that is expanding by close to 7 percent, and this concern has also been echoed by bond investors, who are demanding higher returns for their expectations of higher inflation,” the Fitch unit said.