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PSEi hits 2021 low as inflation hurts sentiment

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THE main index hit a 2021 low on Wednesday as inflation data released earlier in the day showed consumer prices remained high, which affected market sentiment.

The 30-member Philippine Stock Exchange index (PSEi) declined by 59.46 points or 0.93% to close at 6,299.69 on Wednesday, while the all shares index dropped by 24.39 points or 0.62% to 3,882.43.

“The market plunged to its lowest level this year as inflation remained elevated in April,” AB Capital Securities, Inc. Junior Equity Analyst Lance U. Soledad said in a Viber message.

“This further adds to the negative sentiment this week, following the report of the first manufacturing contraction recorded this year, as well as poor [first-quarter] earnings performance…,” Mr. Soledad added.

Meanwhile, AAA Southeast Equities, Inc. Research Head Christopher John J. Mangun said the market is “slowly giving up all the gains from the last rally that started in October.”

“Inflation [data] for the month of April… should mean that prices are peaking and may begin to decline and should have generated some optimism, although most remain concerned as the price of meat continues to rise,” Mr. Mangun said. “Trading volumes also declined as more investors lost interest in the market.”

Headline inflation stood at 4.5% in April, unchanged from the previous month but faster than April 2020’s 2.2%, preliminary data from the Philippine Statistics Authority showed.

Year to date, inflation averaged at 4.5%, still above the central bank’s 2-4% target and its forecast of 4.2% for the year.

“Vaccine rollout maintains at [a] slow pace with foreign investors continuing to sell while most investors remain at sidelines as manifested in the value turnover,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message.

Value turnover went down to P3.89 billion on Wednesday with 4.15 billion shares switching hands from the P4.63 billion with 3.19 issues traded on Tuesday. Meanwhile, net foreign selling increased to P653.37 million on Wednesday from P371.78 million on Tuesday.

Majority of sectoral indices closed in the red on Wednesday, except for mining and oil, which gained 119.76 points or 1.26% to finish at 9,573.66.

Holding firms went down by 83.10 points or 1.28% to 6,374.09; property dropped by 19.91 points or 0.65% to 3,029.91; services shed 8.89 points or 0.6% to end at 1,430.23; financials lost 7.40 points or 0.52% to 1,394.08; and industrials fell by 42.89 points or 0.49% to close at 8,556.60.

Decliners outnumbered advancers, 114 against 92, while 43 names closed unchanged.

AB Capital Securities’ Mr. Soledad placed the PSEi’s support at 6,200.

“The steady decline in new COVID-19 (coronavirus disease 2019) cases has failed to generate optimism as it may not lead to an easing of restrictions in the coming weeks,” AAA Southeast Equities’ Mr. Mangun said. — K.C.G. Valmonte

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