Bangko Sentral stays calm amid PSEi bloodbath

The Bangko Sentral ng Pilipinas (BSP) has shrugged off concerns over the sell-off in the domestic equities market, saying it has enough tools to cushion risks of capital flight away from the country.

“The BSP has instruments in its tool kit to help ensure that any reversal in capital inflows is manageable and would not create excessive volatilities in financial markets,” Central Bank Governor Amando Tetangco, Jr. said in a text message to reporters Wedneseday.

He said the rise and fall of share prices should be expected in any equity market, and that the sustained losses of the benchmark Philippine Stock Exchange (PSE) index “should not come as a surprise to participants.”

The PSEi fell over a hundred points on Wednesday, bringing losses since last Thursday to almost 700 points.

Analysts pointed out that speculations on the US scaling back its bond-buying stimulus amid signs of a firmer economy resulted in a bloodbath in Asian markets, including the PSE.

Investors in search of higher yields have flocked to emerging markets in recent years amid stuttering recovery in the West.

This has caused share prices to spike, with the PSEi reaching new heights. As speculative money flew out, stock prices fell.  

But Tetangco said, “The case for good fundamentals of the country remains in place, and it is my understanding that there are a number of corporate issuances in the PSE that are in the pipeline.

“In addition, the share of domestic buyers in the stock market has been on an uptrend. These factors should continue to provide sound bases for stability in domestic financial markets,” he added. — SOA/KBK, GMA News