PSEi drops on inflation concerns

SHARE prices fell on Monday ahead of May inflation figures due today, with investors said to have chosen to lighten their portfolios given expectations that consumer price growth would again breach the central bank’s target.

The benchmark Philippine Stock Exchange index (PSEi) dropped 0.66 percent or 50.65 points to close at 7,579.61. The wider All Shares retreated 0.51 percent or 23.54 points to end at 4,615.18.

The results bucked rallies in neighboring stock markets, which took heart from better-than-expected US jobs and manufacturing data released last Friday.

“Investors likely took profits ahead of … [the]inflation release, especially in the light of the fact that the Bangko Sentral ng Pilipinas (BSP) is forecasting an acceleration in May inflation,” China Bank Securities Corp. research director Garie Ouano said.

The BSP last week said that May inflation likely exceeded the 4.5 posted in April, possibly rising to as high as 5.4 percent as tensions in the Middle East pushed fuel prices up and the cost of rice also rising due to supply issues.

April was the second consecutive month that inflation topped the Bangko Sentral’s 2.0-4.0 percent target for the year.

Papa Securities Corp. trader Gio Perez said another above-target result could “give a signal if the Monetary Board will hike rates once again in their next meeting on June 21.”

COL Financial Group, Inc. research head April Tan pointed to declines for issues such as Jollibee Foods Corp. (JFC), BDO Unibank, Inc. (BDO), Universal Robina Corp. (URC) and SM Investments Corp. (SMIC) as having weighed on the PSEi.

Gokongwei-led URC fell by P8.00 or 6.21 percent to P120.80 apiece while SMIC declined 3.03 percent or P27.50 to P879 per share. Sy-owned BDO dropped 2.29 percent or P3.00 to finish at P128 while JFC slid by 1.20 percent or P3.40 to P280.40.

Sectoral results were mixed on Monday with industrials, holding firms and financials, down 1.81 percent, 1.13 percent and 0.93 percent, respectively.

Volume turnover was thin with only 464 million issues valued at P5.47 billion traded.

Decliners beat advancers, 113 to 72, while 58 issues were unchanged.

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