(Bloomberg) -- The Philippine central bank needs to do more to help the stock market recover from a slump that has made it Asia’s worst performer this year, according to the nation’s biggest money manager.

Fritz Ocampo, who manages about $19 billion as chief investment officer at BDO Unibank Inc. in Makati, said the central bank’s second interest rate hike this year on Wednesday will fail to fuel a sustainable rebound in stocks because it’s not enough to fully arrest the peso’s slide, as inflation has yet to peak. The Philippine Stock Exchange Index, which is set to close in a bear market, fell 1 percent after opening higher as the peso appreciated 0.2 percent.

“The market needs a clear announcement to calm nerves,” Ocampo said. “We may have not seen the bottom yet.”

Over $43 billion in market value has vanished this year as the benchmark slid more than 15 percent, the world’s worst performer after Turkey. The Philippine Stock Exchange Index dropped below 7,246.90, a signpost for a bear market because it’s 20 percent below the high in January.

If the index eventually rallies, its climb may be limited to about 7,600 as it mimics last month’s pattern, Ocampo said. The index rose over 300 points in two sessions after the May 10 hike and then dropped toward a 14-month low as inflation accelerated and the peso slumped to a 12-year low against the dollar.

Investors think another 25 basis point hike may be needed this year to keep inflation in check and stem the peso’s depreciation, Ocampo said. Wednesday’s rate increase may not be enough to keep up with the Federal Reserve, which has indicated that it may lift as many as four times this year, he added.

Foreign fund withdrawals, which reached $1.14 billion so far this year, could climb to $2 billion by December unless the exodus slows, Ocampo said. He is overweight property companies because of strong residential sales and project launches. Retailers are also attractive as they can pass on the higher cost of goods.

“Foreign funds outflow isn’t showing signs of letting up,” Ocampo said, adding that the index could test 7,000 in the near term as the selloff may escalate before rising to 8,500 by year-end. “Cash is king for now.”

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Naoto Hosoda, Kurt Schussler

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