Philippine shares tank as traders brace for Fed hike

MANILA, Philippines — Local shares tanked on Monday as investors brace for another jumbo rate hike in the US.

The bellwether Philippine Stock Exchange index (PSEi) lost 1.70% to close at 6,437.42 at the start of a new trading week amid growing investor pessimism on the global economy as inflation remains stubbornly high.

The broader All Shares index shed 1.39% while all sectoral counters were in the red, with holding firms posting the biggest loss at 2.67%.

In a market commentary, Luis Limlingan, head of sales at Manila-based brokerage Regina Capital, said local equities were under pressure from a possible rate hike in the US.

“Philippine shares started softly as this week many investors will be awaiting the outcome of the respective central bank meetings this week,” Limlingan said.

Many observers have warned of a sharp recession in many countries caused by the huge rate increases, which are hitting families in the pocket.

And with uncertainty rife owing to a range of issues, including Russia's war in Ukraine and China's lockdown-induced slowdown, equities are in danger of revisiting the lows they hit in June.

Several central banks are due to make rate announcements this week, with Japan and Britain among the biggest, though the main event is Wednesday's Fed decision. At home, the Bangko Sentral ng Pilipinas will hold its rate-setting meeting on Thursday this week.

Elsewhere, Hong Kong stocks lost more than one percent, even after reports of the city's government considering ending hotel quarantine rules.

Shanghai was also down despite news that megacity Chengdu was ending a two-week Covid lockdown that saw 21 million people shut away.

Sydney, Seoul, Singapore, Taipei and Wellington were also in the red. Tokyo was closed for a holiday.

In the Philippines, a total of 660.6 million shares valued at P4.99 billion switched hands on Monday. — Ian Nicolas Cigaral with AFP