Stocks tumbled Friday after the World Bank reduced its 2023 gross domestic product growth forecast for the Philippines and the Bangko Sentral ng Pilipinas hinted of another interest rate hike in May.
The PSE index, the 30-company benchmark, shed 145 points, or 2.18 percent, to close at 6,499.68, as four of the six subsectors declined, with property taking the biggest hit.
The broader all-share index also fell 45 points, or 1.28 percent, to settle at 3,493.37, on a value turnover of P6.17 billion. Losers outmatched gainers, 107 to 73, while 47 issues were unchanged.
Only two of the 10 most active stocks ended in the green, with PLDT Inc. rising 3.20 percent to P1,420.00 and Globe Telecom Inc. inching up 0.22 percent to P1,864.00.
The World Bank said in its East Asia and the Pacific Economic Update released Friday it cut its 2023 growth forecast for the Philippines to 5.6 percent from 5.8 percent it made in October.
It downgraded the country’s growth outlook, despite the upward revision in 2023 growth forecast for developing East Asia and Pacific to 5.1 percent from 3.5 percent in 2022, on the back of China’s recovery.
“China is projected to rebound sharply to 5.1 percent in 2023, following the economy’s swift reopening,” it said.
Meanwhile, BSP Governor Felipe Medalla, speaking at the sidelines of the Association of Southeast Asian Nations forum in Bali, Indonesia, was quoted as saying that it was “too early” to pause in monetary tightening.
Oxford Economics, a London-based think tank, said the BSP was expected to deliver another 25-basis-point hike in the benchmark interest rate in May.
Most Asian markets built on a global rally Friday as worries about the banking sector faded and traders grew optimistic that central banks are near the end of their interest rate hiking cycle.
With the financial turmoil of recent weeks subsiding, traders are refocusing on the battle against inflation, though expectations for how high borrowing costs will go have lowered.
The US Federal Reserve had been tipped to push rates well above five percent by the end of the year, but with credit seen narrowing in light of the latest upheaval, forecasts are for them to finish just above four percent.
That has helped push up equities, which had been under pressure through February and March.
And even comments from top Fed officials warning that the bank would need to keep its focus on fighting inflation — despite concerns about the finance sector — helped sentiment on trading floors.
Boston Fed boss Susan Collins said the banking system was on safe ground, telling a business conference: “Inflation remains too high, and recent indicators reinforce my view that there is more work to do to bring inflation down to the two percent target associated with price stability.”
Meanwhile, Richmond president Thomas Barkin warned stepping back from the battle against soaring prices would be foolhardy.
“If you back off on inflation too soon, inflation comes back stronger, requiring the Fed to do even more, with even more damage,” he said.
“With inflation high, broad-based and persistent, I didn’t want to take that risk.”
Still, all three main indexes on Wall Street pushed well up Thursday, as did European equities following the release of data indicating inflation on the continent was slowing.
In a sign of the improved mood on trading floors, the so-called VIX “fear” index dropped below 20 to its lowest point since the start of March.
In Asia, markets finished a rollercoaster first quarter of the year on a strong note.
Hong Kong was boosted by a rally in tech firms after it emerged that e-commerce giant Alibaba’s logistics arm was preparing for a listing in the city.
News of the IPO by Cainiao Network Technology came after Alibaba said it intended to split into six units and go public.
Alibaba was up more than three percent. Its rival JD.com jumped more than five percent on news that two of its subsidiaries had filed for IPOs in Hong Kong.
Factory and services activity data suggesting the Chinese economy continued to improve also lifted confidence.
Shanghai, Tokyo, Sydney, Seoul, Singapore and Taipei were also in positive territory, though there was selling in Manila, Jakarta and Wellington.
European markets were mixed in early trade, with London flat, Paris up and Frankfurt down.
“So, a solid quarter but the gains largely front-loaded in the first two months of the year as the market picked up on hopes the Fed would pivot — no one foresaw that a banking crisis and credit crunch might be the reasons for this,” said Neil Wilson at Markets.com. “China’s reopening was another factor.”
Investors are now awaiting the release of US and eurozone inflation data later in the day, which should provide a better insight into how much impact rate hikes are having in taming prices. With AFP