The Philippine stock market opened the week in the negative territory, as the Bangko Sentral ng Pilipinas (BSP) reported a decline in net inflows of foreign direct investments (FDIs).
The Philippine Stock Exchange index shed 37.17 points, or 0.53 percent, to close at 6,940.01, while the broader all-shares index slipped 16.78 points, or 0.43 percent, to settle at 3,867.02.
Data from the Bankers Association of the Philippines showed that the peso also dipped to 58.59 against the US dollar Monday from 58.26 Friday.
FDIs, including equity capital, reinvested earnings and borrowings dropped 14.5 percent year-on-year to $813 million in August, indicating potential caution among foreign investors.
Despite the recent selling in the market, Metrobank’s WealthInsights team is recommending investing in the equities market amid expected rate cuts by the BSP and the US Federal Reserve.
“We are shifting our overweight allocation to equities as we anticipate more upside potential despite expected interest rate cuts by the Banko Sentral ng Pilipinas and the US Federal Reserve,” Wealth Insights said.
“With yields projected to trend lower, investors can lock in gains from investments in fixed income and reallocate to equities, which we expect will offer higher returns as a result of improving market sentiment and stronger earnings growth,” it said.
Except for financial sector which rose 0.31 percent, all indices ended in the red.
Mining and oil decline 2.61 percent, as gold prices declined on stronger dollars while industrial fell by 0.89 percent.
Value turnover reached P3.84 billion. Foreign investors were net sellers, with outflows reaching P740.8 million.
Aboitiz Equity Ventures Inc. dropped 5 percent to P34.20, Ayala Land Inc. rose 1.94 percent to P31.60.
Meanwhile, most Asian markets fell Monday after China’s keenly awaited plans to support the world’s number two economy fell short of expectations, while traders were also keeping tabs on Washington as Donald Trump puts his cabinet together after last week’s election win.
Stocks rallied last week on hopes that a second Trump administration — supported by a Republican Congress — would push through a slew of business-friendly policies including deregulation and tax cuts, offsetting concerns about possible trade wars.
However, the mood changed after Beijing said Friday it would ramp up the local government debt ceiling to help them clear so-called hidden debt, but fell short of announcing any new growth-boosting measures for the stuttering economy.
Hopes had been building all last week that officials would deploy a “bazooka” stimulus, the need for which was highlighted Sunday by data showing Chinese inflation slowed last month and came in below forecasts.
Authorities in late September began unveiling a raft of policies aimed at reigniting the economy, which has failed to fire since the lifting of tough Covid-fighting rules at the end of 2022.
Among them were interest rate cuts and an easing of home-buying measures as leaders try to address a crisis in the country’s vast property sector.
Friday’s announcement saw Chinese shares traded in New York plunge more than four percent.
Hong Kong led Asian losses Monday, shedding more than one percent, while Sydney, Seoul, Wellington, Taipei, Manila, Bangkok and Jakarta also fell.
There were gains in Shanghai, Tokyo, Singapore and Mumbai, while London, Paris and Frankfurt also advanced at the open.
The selling came as investors ignored another record for all three markets on Wall Street, which was also helped by another Federal Reserve interest rate cut.
Observers said there were concerns about the impact of Trump’s planned tariffs, which he said would have a particular focus on China, fueling talk of another trade war between the economic superpowers.
Pepperstone Group’s head of research Chris Weston said Beijing may have had an eye on this in its announcement.
“Many feel that China is keeping its tactical powder in play for such time as the Trump-China tariff negotiations build, and they can respond in a more targeted fashion to stem the likely economic fallout,” he wrote.
“In the short-term, however, it does suggest downside risk to China/HK equity and the yuan.”
Meanwhile, bitcoin continued to push to new highs, hitting a record $81,891 Monday on optimism that Trump will ease regulations surrounding the cryptocurrency.
“We shouldn’t expect this bullish trend to be interrupted for a long time — about a year. The next level for me is $100,000,” Stephane Ifrah, of French crypto asset management company Coinhouse, told AFP.
Meanwhile, researchers at Bank J. Safra Sarasin offered a largely upbeat outlook for the next year.
They wrote in a report that “2024 ends with stronger economic growth, more balanced labour markets and lower inflationary pressures than we expected a year ago. In particular, the US economy was more resilient and is still headed for a soft landing”.
“Yet President-elect Donald Trump’s policy proposals could lead to heightened macroeconomic volatility. Deregulation and tax cuts would boost nominal growth, but a trade war would hurt growth and raise prices.” With AFP
