Market retreats; Meralco, Megaworld among losers

Stocks declined Monday on bargain hunting as some investors opted to stay on the sidelines after a recent steep climb.

The Philippine Stock Exchange Index fell 32.42 points, or 0.5 percent, to 6,763.92 on a value turnover of P4.2 billion. Gainers edged losers, 102 to 100, with 60 issues unchanged.

Megaworld Corp., the biggest lessor of office spaces, shed 2.5 percent to P3.13, while Manila Electric Co., the largest retailer of electricity, also dropped 2.5 percent to P275.

Security Bank Corp., the eighth biggest lender in terms of assets, decreased 1.7 percent to P123.90, but Aboitiz Power Corp. of the Aboitiz Group rose 1.5 percent to P23.15.

The res of Asian markets were mixed Monday as investors mulled comments by US Treasury Secretary Janet Yellen on interest rates and weighed the impact of the G7 global tax plan on tech giants.

Yellen told Bloomberg News that President Joe Biden should push ahead with his $4-trillion recovery plan for the world’s top economy even if it triggers inflation and leads to higher interest rates.

While optimism about the global economic recovery and vaccine roll-outs have spurred markets, trading floors remain worried that the rebound will stoke inflation and in turn force central banks to hike rates.

Yellen said any rise in prices due to Biden’s massive plan to revitalize the US economy would be transitory and that higher interest rates would actually be positive.

“If we ended up with a slightly higher interest rate environment, it would actually be a plus for society’s point of view and the Fed’s point of view,” the former Federal Reserve chair said in an interview Sunday with Bloomberg.

“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” she said, adding she wanted them back to a normal level.

Yellen was speaking after returning from a meeting of G7 finance ministers in London which endorsed a global minimum corporate tax rate of at least 15 percent, rallying behind a US-backed plan targeting tech giants and other multinationals accused of not paying enough.

Wall Street posted solid gains, with all three main indexes closing higher Friday after a tepid jobs report eased concerns the expanding economy would force the Fed to pull back on stimulus.

The optimism wavered in Asia, with markets mixed in Monday trade.

Hong Kong closed down 0.5 percent, Sydney was off 0.2 percent, and Taipei slipped 0.4 percent.

Tokyo trimmed earlier gains but still closed up 0.3 percent, Seoul added 0.4 percent and Singapore was 0.7 percent higher.

Shanghai recovered from an early dip to end 0.2 percent higher after traders shrugged off lower-than-expected trade growth figures for May, with imports expanding at the fastest pace in more than a decade, up 51 percent year on year, and exports expanding a solid 28 percent.

“To be honest, that is a cracking number by anybody’s standard and show that global demand remains robust,” said OANDA’s Jeffrey Halley. With AFP