Philippines share prices closed 2.44 percent lower on Tuesday as investors either stayed on the sidelines following the latest downturn on Wall Street or unloaded stocks in anticipation of another US interest rate increase, dealers said.
They said the culprit for another region-wide sell-off was a familiar warning from US central bank officials of the dangers of rising inflation, pointing to the need for higher interest rates as a result.
The composite index fell 51.70 points to 2,068.09 after trading between 2,063.35 and 2,119.79. Volume was 715.19 million shares worth 994.77 million pesos (18.65 million dollars). The broader all-shares index fell 27.34 points to 1,315.34. Losers led gainers 75 to eight, with 37 stocks unchanged. The peso was at 53.35 to the dollar.
"The Philippine market is simply taking its cue from how Wall Street and the regional markets are performing," said Oliver Plana of Asiasec Equities. Investors remain preoccupied by concern over interest rates, said Jose Vistan of AB Capital Securities, suggesting the Philippine central bank could eventually follow the US Federal Reserve's tightening cycle.
The US central bank meets June 28-29 when it is widely expected to hike rates by a quarter of a point for a 17th consecutive time to 5.25 percent. The Philippine central bank meets on June 29.
"Corporate fundamentals are positive but the macro-economic outlook appears to be uncertain," Vistan said. He said the central bank and Bureau of Treasury may not be able to hold off rate hikes any longer, and any rate increase may hurt the fragile economy. Bank and property shares fell on worries that higher interest rates will limit lending growth and sales of properties, dealers said.
Top-traded Bank of the Philippine Islands retreated two pesos to 44.50. Ayala Land fell 50 centavos to 11.25 pesos. Philippine Long Distance Telephone shed 30 pesos to 1,770 and Globe Telecom fell 25 pesos to 905. San Miguel A and B shares were steady at 64.50 pesos and 70 pesos, respectively.