MANILA, 26 August — Most analysts thought Philippine stock market seemed on the way to recovery with the strengthening of the peso vis-a-vis the dollar, but they thought wrong because stock trading plumbed new lows again last week although the peso appreciated also last week.
The market barometer closed at 1,286.07 points after dropping off 20.11 points or 1.54 percent. Fortunately market turnovers were healthier with value turnover rising 34.64 percent to 2.45 billion pesos ($48 million) and actual trading doubling to 5.64 billion shares.
Stock market traders said the US Federal Reserve meeting on interest rate policy on Tuesday contributed to the general cautiousness in the market although the impact of a rate cut was likely to be muted as BSP was not expected to match it.
“We’re still headed downward. Technically, we broke an important support level of 1,270 but rebounded. It’s likely we’ll test it again,” said Allan Araullo, vice president of Regina Capital Development Corp.
“The belief of (US Federal Reserve Chairman Alan) Greenspan that the US turnaround will take much longer than expected is disappointing the market, with the Philippines being highly dependent on the US for trade,” said Astro del Castillo, research head at A&A Securities.
“The announcement of Greenspan was another excuse for foreign investors to lighten their holdings.”
“We’ll likely keep rates unchanged. While we have seen a stabilization of the inflation rate, it is still relatively high,” BSP Deputy Governor Amando Tetangco said.
“We would want to keep the stance of the monetary policy where it is right now.”
“I agree with Tetangco that there’s likely no change in overnight rates because rates are low enough already,” Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura said.
“The cut in interest rates by the Federal Reserve failed to boost sentiment in the US equity markets,” said BPITrade.com investment analyst Spencer Yap.
“This had a similar effect on the local market, although a slight appreciation of the peso cushioned the decline,” Yap continued.
Some traders said the new policy may help shore up the volume of transactions in the market.