Local Stock Benchmark Hits Lowest Level in Over a Year as Interest Rates and Inflation Concerns Grow
In a worrisome turn of events, the local stock benchmark has fallen below 6,100, reaching its lowest level in more than a year. Investors are increasingly concerned about interest rates amid rising inflation, which has led to a retreat in the market.
On the latest trading day, the main index plunged 76.60 points or 1.25 percent to close at 6,047.97. The property sector, which is highly sensitive to interest rates, was hit the hardest, leading the retreat of all counters. The trading volume remained low, with 596 million shares worth P3.65 billion exchanged. Losers outnumbered gainers, with 128 stocks experiencing a decline, 67 stocks showing gains, and 43 remaining unchanged.
Many investors decided to sell their holdings and keep cash on hand as they prepared for the upcoming two-day policy meeting of the Federal Reserve (Fed). According to Regina Capital Development Corporation Managing Director Luis Limlingan, local traders are also waiting for the results of the upcoming policy meetings, with the Fed meeting scheduled from September 19-20 and the Monetary Board meeting on September 21.
The situation has been exacerbated by foreign investors continuing to exit the market, resulting in a net selling of P566.33 million. The net foreign selling for the month has reached nearly P4.7 billion, with no occurrences of net foreign buying. Philstocks Financial Assistant Research Manager Claire Alviar highlighted that the main index reached a new low for the year, dropping to 6,047.97.
Commenting on the situation, Juan Paolo Colet, Managing Director of China Bank Capital Corporation, explained that concerns about rising oil prices and other inflationary pressures are causing uncertainty about the path of interest rates. Both the Bangko Sentral ng Pilipinas (BSP) and the Federal Reserve are expected to keep rates steady during their meetings this week. However, the growing uncertainty about interest rates over the next few months has negatively affected investor sentiment on local equities.
The stock market’s decline reflects the anxiety felt by investors who are closely monitoring interest rates and inflation. While many factors are contributing to the market’s slump, the upcoming policy meetings of the Fed and the Monetary Board are being watched with anticipation. The decisions made during these meetings will undoubtedly have a significant impact on the local stock market and investor sentiment moving forward.