STOCKS recovered on bargain hunting on Tuesday despite data showing faster inflation in May.
The benchmark Philippine Stock Exchange index (PSEi) improved by 37.13 points or 0.55% to close at 6,754.01 on Tuesday, while the broader all shares index inched up by 12.66 points or 0.35% to 3,598.51.
“Philippine shares rebounded today on bargain hunting. The market has already factored in the headline inflation for May that jumped to 5.4%, the highest recorded since the 6.1% seen in November 2018,” Papa Securities Corp. Equities Strategist Manny P. Cruz said in a Viber message on Tuesday.
“Consequently, the monetary authorities are looking to raise rates in their June and August meetings to contain inflation pressure. On top of this, the central bank is also looking to cut the reserve ratio by 200 bps (basis points) to 10% by yearend,” Mr. Cruz added.
“Philippine shares edged higher in a relatively quiet session despite the release of the May CPI (consumer price index) reading… which was in line with the Bloomberg median consensus, making this more of a non-event. Food and transportation were the main culprits as usual…,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
Headline inflation in May surged by 5.4% year on year from 4.9% in April and 4.1% a year ago, preliminary data from the Philippine Statistics Authority released on Tuesday showed.
Year to date, inflation averaged 4.1%. This is lower than the central bank’s 4.6% forecast but above its 2-4% target for the year.
On Tuesday, Monetary Board member and incoming Bangko Sentral ng Pilipinas (BSP) chief Felipe M. Medalla said in a Bloomberg interview that they are “almost” sure to hike at their June 23 meeting and there is also a “90% chance” of another increase at their subsequent review on Aug. 18.
Mr. Medalla said the real question is if an August hike would be the last one for the year and noted decisions beyond this would be data-dependent.
Increases worth 25 bps in the Monetary Board’s June and August meetings would bring the benchmark rate to 2.75% from 2.25% currently following a hike of the same magnitude at its last May 19 meeting to curb growing inflationary pressures.
All sectoral indices ended in the green on Tuesday. Mining and oil advanced by 233.03 points or 1.91% to 12,431.34; holding firms rose by 56.13 points or 0.90% to 6,260.49; property climbed by 16.39 points or 0.51% to 3,182.34; services went up by 6.20 points or 0.33% to 1,856.46; financials gained 2.64 points or 0.22% to 1,611.51; and industrials added 13.18 points or 0.14% to end at 9,132.22.
Advancers beat decliners, 96 versus 90, while 42 names ended unchanged.
Value turnover slid to P4.96 billion with 877.07 million shares changing hands from the P5.94 billion with 1.88 billion issues seen the previous trading day.
Net foreign selling grew to P512.12 million on Tuesday from P287.1 million on Monday. — Luisa Maria Jacinta C. Jocson with Bloomberg