Possible return to strict lockdown worries market

The local stock barometer slipped below 6,300 on Tuesday on escalating fears that the rising local coronavirus infection would trigger a return to strict lockdown protocols.

The main-share Philippine Stock Exchange index (PSEi) lost 61.01 points, or 0.96 percent, to close at 6,267.40 on intensified selling by foreign investors.“The PSEi continues to move in the opposite direction of most global markets as investors weigh the possibility of the reimplementation of stricter lockdown restrictions as new COVID-19 cases surge,” said Christopher Mangun, head of research at AAA Equities.“A pickup in foreign outflows also dampened the sentiment. We may see the main index move lower and test support at 6,040 in the coming days,” he added.There was P2.51 billion worth of net foreign selling in the market for the day. Value turnover stood at P7.59 billion.

Despite the PSEi’s decline, there were 99 advancers that slightly outnumbered 96 decliners, while 47 stocks were unchanged.

The interest rate-sensitive property counter declined the most, losing 2.24 percent.

It was reported on Tuesday that the country’s inflation rate quickened to 2.5 percent year-on-year in June from 2.1 percent in May. ING Philippines economist Nicholas Mapa attributed the increase in inflation to the slight gain in food prices and the normalization in transport costs with crude oil prices recovering.

“With year-to-date inflation at 2.5 percent, inflation is set to settle at the lower end of the Bangko Sentral ng Pilipinas’ (BSP) 2-4 percent target band and allow the central bank to keep an accommodative stance. However, with the BSP’s real policy rate now negative (-0.25 percent), we reiterate our expectation that the central bank will refrain from cutting policy rates further,” Mapa said. —Doris Dumlao-Abadilla INQ