PSEi slips from record highs

The local stock barometer retreated from all-time highs on Tuesday as investors turned cautious ahead of the upcoming US Federal Reserve monetary setting.

The main-share Philippine Stock Exchange index pulled back by 131.44 points or 1.59 percent to close at 8,162.70, while regional markets were mixed ahead of the September 19-20 meetings of the US Federal Open Market Committee.

Even as it was the last day of the “ghost month” – the Lunar month where many Oriental investors turn cautious – investors pocketed gains after the PSEi probed new highs for three straight days.

All counters ended in the red, weighed down most by the holding firm and mining/oil counters which both tumbled by over 2 percent. The services and property sub-indices slipped by over 1 percent.

Total value turnover for the day amounted to P8.91 billion. There was net foreign of P272 million.

There were 121 decliners that edged out 69 advancers while 54 stocks were unchanged.

The PSEi was weighed down most by Megaworld, which fell by 5.11 percent, while GT Capital slid by 4.09 percent.

Ayala Corp. tumbled by 3.81 percent while SM Investments, Ayala Land, PLDT and ICTSI all declined by over 2 percent.

URC and SM Prime both slipped by over 1 percent while BDO, Jollibee, Metrobank and Metro Pacific all slipped.

Aside from the two-day US Fed meeting, a key domestic event this week is the Bangko Sentral ng Pilipinas’ (BSP) monetary setting on Thursday.

“We are with the unanimous consensus of a decision of steady policy settings. Inflation and inflation forecasts remain within the inflation target range of 2-4 percent over the policy horizon,” ING Bank said in a research note. “There is also no compelling reason to support or restrain growth for now.”

Philippine economic growth is expected at 6.5 percent this year and 6.6 percent next year, ING said.

“Inflation and economic activity data and prospects allow BSP to utilize the leeway that these data imply by keeping policy settings steady. The Bloomberg consensus forecast is steady policy rates until the end of this year from the May median forecast of a 25-basis point (bps) hike,” the research said.

ING expects a 25-bps BSP rate hike later this year, citing the need to ensure that inflation expectations remain well anchored especially when congress approves a compromise tax reform measure.

The consensus for 2018 points to a moderate 25-bps rate hike. “We expect a 50-bps policy rate hike in 2018 as developed market central banks turn more hawkish and price pressures rise,” ING said.