The stock market is expected to consolidate its previous gains as it trades sideways this week, with some buyers taking positions for a possible key rate cut by the Bangko Sentral ng Pilipinas (BSP) in its next policy meeting in early April.
The Philippine Stock Exchange index (PSEi) closed Friday’s trade up 78.33 points at 6,298.29.
On a week-on-week basis, the PSEi on Friday gained 5 percent or 300.32 points from 5,997.97.
Compared with the end-2024 finish at 6,528.79 points, however, the PSEi on Friday was still down 3.5 percent, Rizal Commercial Banking Corp. chief economist Michael Ricafort pointed out.
Philstocks Financial Inc. analyst Japhet Tantiangco said the coming week may see some profit taking, given last week’s upturn. “Next week, the local bourse could move sideways. Given the (previous) five-day rally, we may see some episodes of profit taking, which could cause the market to decline,” he said.
“Still, we expect (underlying) optimism to remain driven by prospects of the BSP’s monetary policy easing following our latest inflation print, and our robust fourth quarter and full year 2024 corporate results,” Tantiangco said.
The peso’s continued appreciation is also likely to encourage buying of stocks, he added.
Peter Louise Garnace, equity research analyst at Unicapital Securities Inc., said investors will also be looking forward to key economic data due for release this week — such as foreign direct investments and overseas Filipino remittances — for clues on trading.
Looking at the likely trading influences from the global markets, Garnace said “investors will assess the weaker-than-expected US jobs report from last Friday, while closely monitoring the upcoming inflation print,” he said. “Additionally, the market will continue digesting the tail-end of the earnings season” in the Philippines, Garnace said.
Online stock trading platform 2tradeasia.com said the lower-than-expected Philippine inflation in February at 2.1 percent may result in an early pivot by the BSP on its monetary policy thrust. In its meeting last month, the BSP opted to keep rates steady.
“Recall that the recent RRR (reserve requirement ratio) cut, plus pro-growth comments, imply that the BSP only needs data to resume policy rate cuts. Should the February CPI set a trend, models might have to readjust for possible second-quarter cut,” 2tradeasia.com said.
“While we caution that one datapoint is not cause for celebration just yet, markets also have to acknowledge that liquidity events from rebalancing, plus deep foreign selling in the first quarter, have significantly pushed sentiment to near-maximum pessimism,” the trading platform said in its note. “Positive catalysts tend to cause sharper reactions as they contrast to the prevailing negative sentiment, amplified by the amount of dry powder held in risk-off.”
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“While we caution that one datapoint is not cause for celebration just yet, markets also have to acknowledge that liquidity events from rebalancing, plus deep foreign selling in the first quarter, have significantly pushed sentiment to near-maximum pessimism,” the trading platform said in its note. “Positive catalysts tend to cause sharper reactions as they contrast to the prevailing negative sentiment, amplified by the amount of dry powder held in risk-off.”
At the same time, 2tradeasia.com pointed out that the PSEi is “looking to make a stand at the 6,000 level after a semi-strong but consistent rejection around 5,900.”
“A breakthrough past 6,400, then eventually to 6,700, is what participants should monitor, given improving liquidity (RRR cuts) and fundamentals (inflation outlook). Base-building markets provide opportunities to accumulate ahead of upswings, but keep in mind that conviction and confidence do not return overnight,” it cautioned.
