PSEi tumbles to near 7-month low

MANILA, Philippines — Philippine shares plunged to their lowest in nearly seven months on Monday due to expectations that the American central bank may likely scale back monetary policy easing this year.

The benchmark Philippine Stock Exchange Index (PSEi) tumbled by 2.36 percent, or 153.22 points, to close at 6,343.10.

According to Alfred Benjamin Garcia, research head at AP Securities Inc., this was the bourse’s worst closing value since June 26, 2024, or months before the Bangko Sentral ng Pilipinas (BSP) began its easing cycle.

READ: Asian markets track Wall St losses after blockbuster US jobs report

The broader All Shares Index likewise slid by 1.33 percent, or 49.94 points, to close at 3,704.91.

A total of 806.77 million shares worth P4.96 billion changed hands, stock exchange data showed. Foreigners were net sellers, with foreign outflows reaching P696.26 million.

Garcia noted that the PSEi’s closing value was just a little above the last intraday low of 6,337.83 last Dec. 19.

Bear territory

However, it has not yet entered the bear territory, as it has so far declined by around 16 percent from its recent high of 7,554.68 in October.

For the PSEi to be in the bear market, it must have gone down by at least 20 percent.

Garcia explained that the index’s drop was due to the “stronger-than-expected US jobs report, which trimmed the likelihood of a rate cut in March.”

Central banks are historically known to pause interest rate cuts when job growth is strong, as this lessens the need for an economic stimulus in the form of lower borrowing costs.

According to Garcia, the futures market was now weighing the possibility of the US Federal Reserve slashing interest rates by only 25 basis points (bps) and no more than 50 bps this year.

This will “likely be mirrored” by the BSP to “protect the peso from further depreciation,” he said.

Cheap valuations

“We’re still cautiously optimistic on the market, mainly due to very cheap valuations,” Garcia added. “At this point, we should be slowly accumulating to position for a later rally.”

All subsectors were painted red, with conglomerates recording the steepest drop as index heavyweights SM Investments Corp. and Ayala Corp. slid by more than 4 percent each.

BDO Unibank Inc. was the top-traded stock as it declined by 0.54 percent to P146.70.

It was followed by Ayala Land Inc., down 4.72 percent to P25.25; SM Investments, down 4.14 percent to P834; SM Prime Holdings Inc., down 1.24 percent to P23.80; and International Container Terminal Services Inc., down 1.7 percent to P392.20 each.

Other actively traded stocks were Ayala, down 4.89 percent to P583; Bank of the Philippine Islands, down 2.32 percent to P118.10; Jollibee Foods Corp., down 2.82 percent to P255; Metropolitan Bank and Trust Co., down 3 percent to P71.10; and AREIT Inc., one of the rare gainers as it climbed by 2.08 percent to P41.65 per share.

Losers dominated advancers, 123 to 68, while 51 companies closed flat, stock exchange data showed.

(2025/01/14-02:12)