Inflation surge sends stocks into a tailspin.
The higher-than-expected 5.2 percent inflation for June, which beat all estimates sent the local stock market into a tailspin yesterday.
The gains enjoyed by investors the past several days were wiped out after the government reported yesterday that inflation in June reached a five-year high of 5.2 percent, which the Bangko Sentral ng Pilipinas described as a setback and which adds more pressure on monetary authorities to raise rates sooner and higher than expected.
The benchmark Philippine Stock Exchange index (PSEi)plunged 114.85 points, or 1.56 percent, to finish at 7,233.57 as did the broader All Shares index which wiped out 46.42 points, or 1.04 percent, to settle at 4,407.62.
Likewise, all indices ended in negative territory. Total value turnover reached P5.204 billion. Market breadth was starkly negative, 113 to 75 in favor of decliners. Sixty issues were left unchanged.
Socioeconomic Planning Secretary Ernesto Pernia said the higher inflation was due to faster price increases in major commodities like food, fuel and transport, as well as a host of factors, such as world oil prices, peso depreciation, and price of rice.
'We expect inflation to peak in the third quarter and taper off by October, government needs to implement necessary measures, both short-term and long-term, to address the impact of inflation,' he said.
Justino Calaycay, head of research of Philstocks Financials, said with the high inflation, it comes as little surprise that the PSEI dropped over 100 points.
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|Publication:||Philippines Star (Manila, Philippines)|
|Date:||Jul 6, 2018|
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