THE local stock market rebounded on Thursday, with analysts stressing that the recent round of interest rate hikes in the United States, together with the country’s still-high remittances from Filipinos, bolstered investor mood.
The benchmark PSEi index accelerated 1.16 percent to 6,393.01, or 73.59 points, while the wider All Shares index climbed 0.75percent to 3,435.24, or 25.54 points.
While the market had expected the US Federal Reserve (Fed) to raise rates by 75 basis points, Regina Capital Development Corp. Managing Director Luis Limlingan said the readiness of Fed Chairman Jerome Powell to make another hike of that magnitude to bring inflation back to the 2-percent target shocked investors.
For his part, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the PSEi (Philippine Stock Exchange index) correction is in line with the 1 percent-2.5 percent relief rally in US equity markets following the widely anticipated US rate hike.
He also noted that the PSEi rose when US Treasury rates dropped from recent highs, with the benchmark 10-year tenor now at 3.34 percent, down from an 11-year high of 3.50 percent on June 14.
“The PSEi also corrected higher after the latest OFWs (overseas Filipino workers) remittances data went up year on year despite the monthly volume/amount easing to 11-month lows,” Ricafort noted.
According to central bank data, personal remittances, or cash or kind transfers between families, totaled $2.67 billion in the fourth month of 2022, down 7.51 percent from $2.88 billion in March of this year, but up 3.76 percent from $2.57 billion in April 2021. It’s the smallest amount sent since $2.65 billion was sent in May last year.
Meanwhile, Japhet Tantiangco, senior research analyst at Philstocks Financial Inc., said the local market recovered as investors sought bargains after the previous day’s losses.
“The continuous growth in our cash remittances as seen in our April figures gave sentiment a boost. The positive spillovers from Wall Street’s overnight performance also helped in the rebound,” he added.
Tantiangco, however, said trading remained weak, with net value turnover of P5.45 billion, which was lower than the year-to-date average of P6.79 billion. Foreigners were net sellers, with P295.08 million in net outflows.
Only the services sector, which lost 2.05 percent, suffered losses. With the properties ahead, the others gained 2.37 percent. He pointed out that decliners outnumbered advancers 107 to 103.