Market ends flat; Converge declines

Share prices closed nearly flat Monday, with investors taking profits in select issues that have surged in recent days.

The Philippine Stock Exchange Index added 6.35 points, or 0.1 percent, to 7,219.81 on a value turnover of P11.2 billion. Losers, however, beat gainers, 131 to 67, with 42 issues unchanged.

Converge ICT Solutions Inc., a fiber broadband service provider, sank 12 percent to P28, while noodles maker Monde Nissin Corp. slumped 7.2 percent to P15.20.

AC Energy Corp., a unit of the Ayala Group, fell 4.6 percent to P10.80, but property developer Robinsons Land Corp. of the Gokongwei Group rose 8.5 percent to P17.40.

The rest of Asian equity markets were mixed Monday as inflation concerns returned to the fore, while a further slowdown in China’s economic growth reinforced concerns about its stuttering recovery.

Tokyo, Shanghai, Seoul, Wellington and Taipei fell but there were gains in Hong Kong, Sydney, Mumbai, Bangkok and Jakarta. Singapore was flat.

The tepid performance followed a healthy run-up last week across the world fueled by a strong start to the earnings season, which helped distract from surging prices.

However, a further rise in the oil market—WTI is at a seven-year high and Brent is at a three-year peak—has refocused attention on the threat of inflation.

Data last week showed Chinese factory-gate costs at their highest in a quarter of a century in September, while US wholesale inflation hit a record. And on Monday, New Zealand said prices rose at their quickest rate in a decade.

That has increased pressure on central banks around the world to tighten the easy money policies put in place at the start of the COVID-19 pandemic, which have been key to a strong economic and equity market recovery.

Some banks—including in South Korea and New Zealand—have already hiked borrowing costs while the Bank of England has indicated it is close.

Meanwhile, the US Federal Reserve is expected to begin paring its bond-buying program before the end of the year, and some observers are suggesting it could lift interest rates possibly before 2023.

The prospect of higher rates and less cheap cash has weighed on sentiment for several months and reassurances that inflation would only be temporary have been overtaken by the surging energy costs caused by reopenings around the world and a recovery in demand.

The lifting of travel restrictions into the United States from next month will likely add further upward pressure to prices.

“How risk markets respond to the bringing forward of rate hike expectations will be key to watch this week, as will anecdotes from the profit reporting season to see how firms are dealing with higher input costs and to what extent they are able to pass this onto consumers,” said National Australia Bank’s Tapas Strickland.

China on Monday said growth eased to 4.9 percent in July-September, slightly slower than forecasts, as a crackdown on the real estate sector dealt a severe blow to a crucial part of the economy.

That has come at the same time as a worsening energy crunch across the country—partly caused by government emissions targets—that has forced some businesses to scale back activity. With AFP