Hike rates

Stocks rise as market expects BSP to hike rates


THE MAJOR INDEX jumped on Wednesday as investors bought shares ahead of Thursday’s Bangko Sentral ng Pilipinas (BSP) policy meeting, where analysts expect a rate hike to fight inflation.

The benchmark Philippine Stock Exchange Index (PSEi) climbed 132.94 points or 2.01% to close at 6,727.60 on Wednesday, while the broader all-stock index rose 56, 41 points or 1.59% at 3,590.06.

“Philippine stocks were bought ahead of the BSP meeting and as investors digested retail sales numbers that were in line with consensus expectations,” said Regina Capital Development Corp. Sales Director Luis A. Limlingan, in a Viber message.

BSP Governor Benjamin E. Diokno said in an online briefing Wednesday that “[the] the room to maintain accommodative policy has narrowed dramatically” as inflation continues to hit multi-year highs.

Inflation hit a 40-month high of 4.9% a year last month, down from 4% in March and 4.1% in April a year ago, according to preliminary data from the Philippine Statistics Authority. .

This was the fastest pace since printing 5.2% in December 2018. The headline figure also beat the central bank’s 2-4% target for the year.

For the first four months, inflation averaged 3.7%, lower than the 4.1% observed in the same period last year and the 4.3% forecast by the central bank for the year.

Some market participants are forecasting a rate hike at Thursday’s BSP meeting as faster-than-expected economic growth in the first quarter is expected to put upward pressure on inflation.

A Business world A poll of 17 analysts taken last week showed they are split on the BSP’s next move, with nine betting rates set to remain unchanged, while eight expect a 25 basis point hike.

Benchmark rates have been at historic lows since November 2020, when the BSP cut rates by 25 basis points.

Meanwhile, Philstocks Financial, Inc. senior research analyst Japhet Louis O. Tantiangco attributed the local market’s rise to positive fallout from the overnight Wall Street rally.

At home, the majority of sector indices ended in the green with the exception of real estate, which fell 18.05 points or 0.59% to 3,008.81.

On the other hand, mining and oil gained 297.06 points or 2.72% to 11,201.53; services rose 50.15 points or 2.70% to 1,907.66; holdings gained 163.38 points or 2.67% to end at 6,261.46; industrials improved 218.63 points or 2.41% to 9,288.61; and financials rose 31.28 points or 1.98% to 1,604.87.

Turnover in value rose to 7.75 billion pesos on Wednesday with 1.6 billion shares rising from 7.32 billion pesos to 1.17 billion in issues recorded the previous trading day.

Advances beat decliners, 134 to 60, while 45 names closed unchanged.

Foreigners became buyers with 270.89 million pesos in net purchases against 65.05 million pesos in net sales observed on Tuesday. — LMJC Jocson with Reuters