PSEi ends slightly up on inflation news

The stock barometer ended a bit higher on Friday as the country’s May inflation rate steadied at 4.5 percent, just in line with consensus expectations.

The Philippine Stock Exchange index (PSEi) added 4.47 points or 0.07 percent to close at 6,796.34, shored up by about P1.06 billion worth of net foreign buying.

For the week, the PSEi gained a total of 121.83 points or 1.82 percent.

“Local shares closed little changed as investors digested the latest inflation print. The May headline inflation remained at 4.5 percent due to the mixed movement in commodity groups,” said Luis Gerardo Limlingan, managing director at Regina Capital Development.

The local inflation rate breached the upper end of the Bangko Sentral ng Pilipinas’ (BSP) 2-4 percent inflation target for the fifth straight month.

“Inflation will likely decelerate in the coming months as supply conditions ease with inflation set to return within target by as early as July. We expect BSP to extend its pause for the balance of the year while penciling a possible rate hike by third quarter 2022 as economic conditions improve considerably,” said Nicholas Mapa, economist at ING Philippines.

Mapa said above-target inflation was constraining the BSP from cutting policy rates further while the disappointing first quarter gross domestic product turnout was likely enough to convince BSP chief Benjamin Diokno that interest rates should stay where they are for now.

“With bank lending in negative territory for five months and counting, it’s clear that the banking sector is still in need of stimulus from monetary authorities,” Mapa added.

At the local stock market, the financial, holding firm and services counters all ended a tad higher, while the industrial, mining/oil and property counters slipped.

Value turnover for the day amounted to P5.92 billion.

There were 110 advancers that edged out 88 decliners, while 48 stocks were unchanged. —Doris Dumlao-Abadilla