THE market is expected to focus primarily on the February inflation report, while the ongoing US trade war is seen keeping buying interest at bay.
The Philippine Statistics Authority is scheduled to announce the inflation rate last month this Wednesday, March 5, 2025.
Online stockbroker 2TradeAsia said inflation could take center stage this week as the summer and election seasons converge in May.
The market is still trying to find “clarity” regarding the geopolitical situation with regards to China’s reemergence and the tensions between the US and the North Atlantic Treaty Organization over the Ukraine-Russia war.
The Bangko Sentral ng Pilipinas expects inflation to remain stable between 2.2 and 3 percent in February, compared with 2.9 percent in January, due to a slower movement of prices in the food basket.
The main PSEi lost 126.12 points or 2.06 percent to 5,997.97 on Friday, and 1.2 percent from 6,098.04 on February 28.
Higher tariffs on Canadian and Mexican imports to the US will take effect this week, pushing markets on the verge of breaching significant support levels.
Despite the rocky conditions the market has experienced so far in the two months of the year, the PSEi managed to gain 135.38 points or 2.3 percent as of end February, from 5,862.59 as of end January, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.
Colfinancial.com said the PSEi is actually down 21.13 percent from its high of 7,604.61 in 2024.
In the year-to-date, the PSEi is down 8.13 percent from 6,528.79 when the market closed in 2024.
As things now stand, external risks continue to cap rallies, 2TradeAsia said.
“But mean reversion and factor rotation could create tactical opportunities once confidence stabilizes. Stay strategic, see beyond fear, move early,” it added.
Colfinancial.com said meanwhile, investors should also look at dividend stocks after the latest market rout.
“With interest rates expected to drop and the economy looking strong, the Philippine stock market offers an abundance of high dividend yield stocks, making it an attractive option for investors,” it said.
“Right now, stocks with a 5.4 percent dividend yield such as utilities, REITs, banks, and consumer companies offer passive income comparable to the current 10-year government bond yield of 6.1 percent,” Colfinancial added.
Stock dividends are taxed 10 percent, compared with 20 percent on bond yields, providing a competitive advantage as well as the potential to reap capital appreciation.
“If valuations return to normal, stock prices could rise by over 60 percent. The market could gain even more if economic conditions improve and company earnings grow,” Colfinancial said.
