Stock market declines; LT Group and BPI drop

The stock market corrected Wednesday as investors cashed in on gains in recent days after daily COVID-19 cases slowed down and the economy reopened further.

The Philippine Stock Exchange Index fell 65.99 points, or 0.9 percent, to 7,375.68 on a value turnover of P11.2 billion. Losers beat gainers, 116 to 77, with 56 issues unchanged.

Fiber broadband services provider Converge ICT Solutions Inc. dropped 2.9 percent to P33.90, while LT Group Inc. of tobacco and airline tycoon Lucio Tan declined 5.1 percent to P10.

Bank of the Philippine Islands, the third-biggest lender in terms of assets, shed 4.1 percent to P91.85, while Synergy Grid & Development Phils. Inc., operator of the country’s electricity grid, sank 96.8 percent to P12.60. Synergy, however, rose 5 percent from its follow-on offering price of P12.

The rest of Asian equities mostly fell Wednesday after a record-breaking rally on Wall Street finally came to an end, with inflation returning to the fore as prices in the United States and China continued to surge.

Shanghai, Tokyo, Sydney, Seoul, Singapore, Seoul, Mumbai, Wellington, and Jakarta were all in negative territory.

However, Hong Kong reversed an early sell-off to end in positive territory thanks to a rally in beaten-down tech firms, while Taipei also edged up.

While markets—particularly in the United States—have chalked up all-time highs in recent days and weeks, traders remain nervous about the constant stream of data showing global inflationary pressures building as supply chains are snarled and demand spikes.

In reaction, central banks have turned increasingly hawkish with some raising interest rates and others paring back vast support measures put in place at the start of the pandemic, which have been key to the rally in world equities for the past 18 months.

On Wednesday, China released a report showing the prices paid at factory gates had jumped 13.5 percent on-year in October to their highest level in more than two decades owing to soaring energy prices and as supplies were hit by coronavirus lockdowns in parts of the country.

The figures also showed a further pick-up in consumer inflation.

The readings will cause a headache for leaders as they fight to prevent prices from running out of control but also provide support to the economy as its recovery stutters under pressure from the recent COVID flareups. With AFP

Wednesday’s news came a day after the Labor Department said US wholesale prices remained elevated last month and observers said the advances would likely continue this year. The consumer price index is released later Wednesday.

“Because we haven’t seen inflation for a while, people aren’t used to it,” Drew Matus of MetLife Investment Management told Bloomberg Television.

“What we should expect over the next half a year is—as people become more understanding of what the Fed might do—we are going to see more volatility.”

“Asia is on inflation alert, fearing future costs of inputs from goods sourced from the (Chinese) mainland,” said OANDA’s Jeffrey Halley. With AFP