PSEi flat as market awaits new BSP chief’s stance

By Arra B. Francia, Reporter
THE MAIN INDEX ended flat on Tuesday as investors were surprised at the sudden appointment of Budget chief Benjamin E. Diokno as the new governor of the Bangko Sentral ng Pilipinas (BSP).
The 30-member Philippine Stock Exchange index (PSEi) slipped 0.06% or 4.85 points to close at 7,670.62 yesterday despite gains in the early morning session after the release of better-than-expected inflation data for February.
The broader all-shares index likewise dropped 0.17% or 8.07 points to 4,740.90.
“Market has been on “sell on strength” mode, and the failure to rally despite the very good inflation number is worrisome. Foreigners have been net sellers today, and I attribute that to worries over the appointment of Diokno as BSP chief,” AAA Southeast Equities, Inc. President William Matthew M. Cabangon said in a text message on Tuesday.
“We do not share this pessimistic view. Markets have been asking for a rate cut by the BSP, and believe the Diokno appointment makes this scenario more likely. We are in wait-and-see mode as more clarity surfaces on where the new BSP chief’s stance is,” Mr. Cabangon added.
Presidential Spokesperson Salvador S. Panelo confirmed Mr. Diokno’s appointment as BSP chief Monday night, replacing the late BSP Governor Nestor A. Espenilla, Jr. who died of cancer last month.
Foreign investors exited the market on Tuesday, logging net sales of P1.28 billion versus a net inflow of P80.52 million in the previous session.
The PSEi’s decline came amid the Philippine Statistics Authority’s report that headline inflation slowed to 3.8% in February, near the lower end of the BSP’s estimate of 3.7-4.5% last week and within the 2-4% target for the year.
“This should have come as extremely good news however the main index ended in the red today… Despite the good news, investors continue to be scarce and wait on the sidelines. Foreign selling also weighed the market down today,” Eagle Equities, Inc. Research Head Christopher John Mangun said in an e-mail on Tuesday.
Mr. Mangun expects good corporate earnings, a stronger currency, and slowing inflation to push the market higher in the following days.
Sectoral indices were equally split between gainers and losers. Leading the advance was the services counter, which jumped 1.14% or 17.41 points to 1,536.10. Financials rose 0.17% or 2.92 points to 1,704.65, while holding firms added 0.07% or 6.13 points to 7,723.97.
Property dropped 0.81% or 31.97 points to 3,907.74. Mining and oil fell 0.75% or 61.37 points to 8,088.05, and industrials went down 0.06% or 7.66 points to 11,357.13.
Some 3.55 billion issues valued at P6.62 billion switched hands yesterday, slightly higher than Monday’s P6.21 billion. Excluding block sales, turnover would have been lower at P5.19 billion.
Decliners swamped advancers, 115 to 89, while 46 names were unchanged.