MANILA, 8 July— The fast-falling peso also brought down the local stock market although the decrease was apparently not that much since stock trading had already been on the decline during the past few weeks for a variety of reasons, primarily the lack of positive economic developments, the depressing world market and the continuing hostage crisis triggered by the Abu Sayyaf Group.
The market barometer fell again last week, this time by 13.15 points or almost a percentage as it closed at 1,396.92 points. Value and volume turnovers also fell. Total value traded was less by 52.13 percent at P2.27 billion ($43.6 million) while volume turnover edged down 0.71 percent to 4.29 billion shares.
Traders were not surprised that the market was affected by the inflation and exports data released last week as well as the weak peso which touched a five and a half month low on Wednesday.
“Mostly it was just lower liners moving ... people want to play something,” Regina Capital Development Corp. vice president Allan Araullo said.
The fall of the market barometer was not that large because the peso managed to recover slightly against the dollar near the end of trading on Friday from a low of P53.10 last Wednesday to the region of P52.90.
“The peso helped improve market sentiment when it showed some strength. If the market sustains the 1,400-range and the peso appreciates, these would help improve sentiment and may make the retest of the 1,490 resistance possible,” Roberto Cano analyst at BPI Securities Corp., said.
Unfortunately, the National Statistics Office (NSO) reported inflation for the month of June sped up slightly to 6.7 percent from the previous month’s 6.5 percent.
Prices of food, beverages and tobacco, that accounted for 55 percent of the consumer price basket, swelled 4.9 percent last month compared with the 3.8 percent rise in May.
“Prices of basic commodities are expected to rise further in the coming months as the weaker peso and higher petroleum prices will be passed on to consumers. What’s keeping inflation under control is the prevailing weak demand. Inflation is rising due to cost-push factors,” Jose Vistan, analyst at AB Capital Securities Inc., said.
“Inflation concerns have began to prop as energy costs continued to rise. Besides local concerns, pricing pressures from abroad may still push the country’s inflation rate higher in the coming months,” he added.
“With no fresh impetus to drive the market, the main index is expected to remain within its tight one hundred point range of between 1,380 and 1,480,” Vistan said.
“Market conditions are not yet favorable enough to attract any sort of aggressiveness. With inflation on the rise while the peso remains volatile, domestic interest rates should start to slowly creep up,” he added.
“We could possibly push towards 1,450 points barring any significant new negative developments,” Araullo said.
