Philippine stocks enter bear market

A trader reacts during trading at the Philippine Stock Exchange in Makati city, Metro Manila, Philippines June 27, 2016. REUTERS/Romeo Ranoco
A trader reacts during trading at the Philippine Stock Exchange in Makati city, Metro Manila, Philippines June 27, 2016. REUTERS/Romeo Ranoco

The Philippine Stock Exchange (PSE) has succumbed to a bear market after its composite index (PSEi) fell by over 239.47 points on Tuesday (September 27).

PSEi reached the threshold of bear market as soon as it hit 6,041 points, with the index reaching as low as 5,962.17 within the day and eventually closed at 6,020.07.

When the market shut on Friday, the PSEi closed at 6,259.54 points.

Stocks fell to a two-year low over concerns about rising inflation and the peso’s continued weakness against the US dollar.

The last time the market reached these levels was during the early months of the pandemic in October 2020, and before the health crisis, in 2014.

This came at a time when the peso hit its lowest again at P58.99 to $1, days after the United States Federal Reserve raised interest rates by 0.75 points in an attempt to combat inflation.

Analysts First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in a joint report that they expected the Bangko Sentral ng Pilipinas (BSP) to follow the steps of the US Fed and raise base points by 25 so that the peso would not lag behind the dollar.

“We expect another 25-basis-point (bp) [increase] before the end of the year if inflation remains above 6.5%,” the partners said.

However, the peso might strengthen as overseas Filipino workers (OFWs) send remittances in November to their relatives at home, making it cheaper for the country to import. FMIC and UA&P also anticipate that inflation might peak at 6.7 percent in September or October.

Mark Ernest Famatigan is a news writer who focuses on Philippine politics. He is an advocate for press freedom and regularly follows developments in the Philippine economy. The views expressed are his own.

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