Stocks drop further on fresh inflation concerns


STOCKS continued to decline on Thursday as the possibility of an increased pork tariff rate caused renewed concerns over inflation, dampening market sentiment.

The benchmark Philippine Stock Exchange index (PSEi) declined by 16.91 points or 0.26% to close at 6,282.78 on Thursday, while the broader all shares index lost 2.78 points or 0.07% to end at 3,879.65.

China Bank Securities Corp. Research Associate Jason T. Escartin said market sentiment stayed weak due to the possibility of an increase in pork tariffs, “which may fan inflation concerns anew.”

“While the compromise agreement between local hog raisers and government is likely to hurt short-run market sentiment due to its impact on inflation expectations, we think this reduces the uncertainty around a sharper policy reversal in [the second half of the year],” Mr. Escartin said via e-mail.

The government’s economic managers the Senate have compromised to set the pork tariff rate at 10% should it be within the minimum access volume (MAV) quota in the first three months, with a five percent increase to 15% for the next nine months.

Meanwhile, pork tariff rates for imported goods beyond the MAV quota were recommended to be set at 20% for the first quarter, which will increase to 25% in the next nine months.

“Reports of additional doses of the AstraZeneca vaccine and the arrival of Pfizer vaccines this month, which almost doubles the expected number that will arrive in May, failed to generate optimism among investors,” AAA Southeast Equities, Inc. Research Head Christopher John J. Mangun said in a separate e-mail.

“Skepticism is the prevailing sentiment as most would prefer to wait for actual results rather than speculate on potential positive developments. Trading volumes picked up slightly but remained below the average,” he added.

Value turnover increased to P5.28 billion on Thursday with 13.84 million issues traded, from the P3.89 billion with 4.15 billion shares switching hands on Wednesday.

Sectoral indices were split on Thursday. Holding firms went down by 105.09 points or 1.64% to 6,269; mining and oil fell by 122.19 points or 1.27% to end at 9,451.47; and services inched down by 4.81 points or 0.33% to 1,425.42.

Meanwhile, property gained 44.33 points or 1.46% to close at 3,074.24; industrials went up by 53.68 points or 0.62% to 8,610.28; and financials improved by 3.71 points or 0.26% to finish at 1,397.79.

Net foreign selling went down to P460.67 million on Thursday from the P653.37 million seen in net outflows logged on Wednesday. Decliners outperformed advancers, 126 versus 77, while 44 names closed unchanged.

“The PSEi is currently down 1.5% for the week and it may continue lower towards its 6,180 support,” Mr. Mangun said.

“Current valuations offer an opportunity to buy into beaten-down blue chips, especially as recovery expectations pick up over the medium-term alongside vaccine arrivals,” China Bank Securities’ Mr. Escartin added. — Keren Concepcion G. Valmonte

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