Market likely to drop on US plan to hike rates

Stocks are expected move sideways this week with a downward bias on concerns the US Federal Reserve will resume raising interest rates in June.

Analysts said talks of possible increase in US interest rates would trigger movement of "hot money" away from emerging stocks, including the Philippines, towards developed economies.

RCBC Securities Ralph Christian Bodollo said investors would also continue to monitor pronouncements from presumptive president Rodrigo Duterte regarding Cabinet appointments and action plan for his six-year term.

"With most of 1Q results already out, announcements from the incoming Duterte administration that will add flesh to its action program for the next six years and offshore events would set the tone for next week's session," Bodollo said.

The Philippine Stock Exchange index, the 30-company benchmark, closed lower by 1.9 percent last week to close at 7.299.03 on May 20, while the broader all-share index dropped 0.6 percent to 4,385.98.

The local bourse tumbled even as the government reported strong first-quarter economic growth on May 19.

The government said the first-quarter gross domestic product grew 6.9 percent, its fastest pace in nearly three years, driven by strong consumer spending ahead of the elections.

Except for the mining and oil index, which jumped 5.3 percent, all other major indices ended in the red, led by services, which dropped 4.3 percent, industrial which declined 2 percent and property which lost 1.5 percent.

Foreign investors were net sellers last week by P252 million, as total foreign selling reached P24.69 billion while foreign buying amounted to P23.43 billion.

Among top gainers last week were mining firms Manila Mining "A" which climbed 23 percent to P0.016, Apex Mining Co. which jumped 21.4 percent to P2.44 and Philex Mining Corp. which advanced 20.2 percent to P7.48. Jenniffer B. Austria

Heavy losers included Ginebra San Miguel Corp. which went down by 14.4 percent to P12.64, SSI Group Inc. which dropped 10.1 percent to P2.84 and Bloomberry Resorts Corp. which shed 10 percent to P4.25.

Source: The Standard