Stocks nosedive, peso slightly up

MANILA, Philippines — Share prices continued to nosedive yesterday on escalating tension between the US and China and uncertainty ahead of the Bangko Sentral ng Pilipinas (BSP) Monetary Board meeting, analysts said.

The benchmark stock market index plunged by 101.50 points to settle at 7,312.61.

Likewise, the broader All Shares index ended at 4,481.71, down 49.33 points or 1.08 percent.

Traders said investors opted to stay on the sidelines ahead of the meeting of the BSP.

The peso, meanwhile, managed to gain by four centavos to close at 53.44 to $1 from Monday’s 53.48 to $1, ending its six-day losing streak.

The local currency opened stronger at 53.39 and hit an intraday low of 53.49. Volume picked up to $733.7 million from $568 million last Monday.

Despite being the weakest currency in the region, Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the medium-term stability of the peso is well supported by sound macroeconomic fundamentals.

“Peso exchange rate flexibility promotes self-correcting mechanisms, helps maintain price competitiveness, and prevents the build-up of unsustainable imbalances which in turn should help keep the balance of payments and the monetary system under control,” Espenilla told participants of the Philippine economic briefing in Tokyo, Japan.

He added the country’s gross international reserves (GIR) stood at about $79 billion as of end-May and could cover more than seven months of imports of goods and payments of services and income.

“Nevertheless, the BSP is ready to act to prevent excessive peso volatility and overshooting due to speculative activities,” the BSP chief said.

Economists anticipate the BSP’s Monetary Board to deliver another rate hike today after lifting rates by 25 basis points for the first time in more than three years last May 10.

The rest of the indexes likewise headed south, battered by the prevailing negative sentiment.

Total value turnover, meanwhile, was thin at P6.893 billion. Market breadth was negative, 125 to 70 in favor of declining stocks.

Forty-seven issues were left unchanged.

Gio Perez, a trader at Papa Securities said the heavy selling may be due to market uncertainty surrounding the BSP’s decision.

“Despite the peso’s slight recovery today from its recent high of 53.530, the selling may have continued due to the uncertainty surrounding the BSP’s decision on interest rates (today). A rate hike by the monetary board will stem further peso depreciation which may lead to some positivity for the stock market,” Perez said.

Thus, he said the PSEi made another low for the year as it dropped by as much as 160 points to 7,253.12, before closing a bit higher at 7,312.61. 

“Nevertheless, we still look to the area between 7,100 and 7,150 as the PSEi’s next support for guidance,” he said. – With Lawrence Agcaoili