The Philippine stock market closed below the 6,300 level Friday despite the regional upswing on concerns over interest rates.
The Philippine Stock Exchange index (PSEi) plummeted by 82.66 points, or 1.3 percent, to close at 6,296.20, while the broader all-shares index declined by 24 points, or 0.65 percent, to settle at 3,681.34.
“Philippine stocks succumbed to profit-taking ahead of the weekend as investors assessed pronouncements made by the administration regarding tariffs, OPEC+, and interest rates among others,” Regina Capital Development Corp. head of sales Luis Limlingan said,
Only the mining and oil index ended in the positive territory, rising 0.26 percent. Financials went down 1.72 percent, followed by property which declined 10.5 percent.
Value turnover amounted to P3.931 billion, with 86 advancers, 95 decliners and 59 unchanged stocks.
Meanwhile, the PSE said Friday AREIT Inc. and China Banking Corp. would join the 30-company PSEi starting Feb. 3 as a result of the bi-annual index review.
AREIT and CBC will replace Nickel Asia Corp. and Wilcon Depot Inc.
“It is notable that our very first listed REIT has also become the first REIT to make it to the PSEi. This shows the immense potential REITs have as an investment product, and serves as a good example for REIT issuers that aspire to maximize this particular type of listing vehicle,” PSE president and chief executive Ramon Monzon said.
PSE’s dividend yield index will also see the addition of Robinsons Land Corp., replacing International Container Terminal Services Inc.
Philippine Seven Corp. will be part the 20-member midcap benchmark following the exit of DDMP REIT Inc.
All sectoral indices will remain unchanged except for the Industrial sector, with the inclusion of Pryce Corp. and the exclusion of Fruitas Holdings Inc.
A listed firm should be among the top companies in terms of liquidity and market capitalization to qualify for inclusion in the indices. It should also maintain a free float level of at least 20 percent of its outstanding shares.
Relevant financial criteria are also considered by the PSE in evaluating the index composition.
Meanwhile, Asian markets rose Friday after a record day on Wall Street in response to Donald Trump’s tax-cut pledge, while the yen strengthened after a widely expected interest rate hike by the Bank of Japan.
In a much-anticipated speech via video link at the Davos World Forum in Switzerland, Trump pushed for lower interest rates and said he would cut taxes for companies investing in the United States while imposing tariffs on those who do not.He also called on Saudi Arabia and OPEC to lower oil prices, adding that “when the oil comes down, it’ll bring down prices” and in turn bring interest rates down.
His comments come after he said on the campaign trail that he would slash taxes, regulations and immigration while hitting key trading partners with tariffs.
That fueled worries among some economists that he could reignite inflation and cause the Federal Reserve to pause its recent run of rate cuts, or even increase them.
US traders appeared to welcome the speech, with the S&P 500 hitting a record high, while the Dow and Nasdaq also advanced.
Asia mostly followed suit, with Hong Kong, Shanghai, Sydney, Seoul, Mumbai and Bangkok all up, though Tokyo, Singapore, Wellington, Jakarta and Manila slipped.
London and Frankfurt rose again after hitting fresh record highs Thursday, while Paris also advanced.
Markets have enjoyed a broadly positive start to Trump’s second term amid relief that while he has warned about imposing big tariffs on key partners, he has so far been less abrasive than his first four years.
Matt Burdett and Adam Sparkman at Thornburg Investment Management said that could be due to circumstances.
“Eight years ago, Trump’s aggressive trade policies were implemented against a backdrop of low inflation and low rates, creating room for bold actions,” they said in a commentary.
“Today, elevated price levels are a key concern for voters and policymakers alike. Given this reality, we question if Trump’s tariff posturing may now be aimed more at pressuring China and other foreign countries into negotiating favorable trade terms for the US.”
– Japan hikes rates –
The Bank of Japan on Friday lifted borrowing costs to their highest level since 2008 in a well-telegraphed move, with data showing another jump in inflation last month that reinforced expectations for further tightening.
“Japan’s economic activity and prices have been developing generally in line with the Bank’s outlook, and the likelihood of realizing the outlook has been rising,” the bank said in a statement.
The yen briefly rallied to as strong as 154.85 per dollar after officials flagged more increases were likely in the pipeline as inflation remains elevated and officials slowly withdraw stimulus that has kept monetary policy at ultra-loose levels for years.
Moody’s Analytics said “the weak yen is a key reason” for the hike, along with a run of forecast-beating inflation prints.
BoJ chief Kazuo Ueda told a news conference that the pace and timing of future hikes was yet to be determined.
“We would like to make a decision after we have studied the impact of this rate hike,” he said.
The yen has come under pressure against the dollar in recent months after the Fed dialed back its expectations for rate cuts this year and the concerns over Trump’s impact on inflation.
The BoJ decision comes ahead of the Fed’s meeting next week, which will be closely watched for its views on the outlook under the new president.
Oil prices were barely moved after Thursday’s losses that followed Trump’s call to Riyadh and OPEC, with a recent build in US stockpiles adding to the weakness. With AFP
