Philippine shares are expected to stay afloat on bargain hunting this week as investors await the results of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Thursday, April 10.
“With already four straight weeks of decline, the market is drawn to more attractive levels from a fundamental standpoint. Hence, we may see bargain hunting in this week’s trading,” Japhet Tantiangco, an analyst at
Philstocks Financial Inc., said.
“Expectations that the BSP will cut policy rates in their upcoming meeting following a further decline in inflation in March may give sentiment a boost,” Tantiangco said, while giving caution that global economic concerns over the US-initiated tariff war will continue to weigh on the market and temper a potential rise.
The Philippine Stock Exchange index (PSEi) closed last week’s trade down 1 percent at 6,084.19, compared with the prior week’s 6,147.44.
Michael Ricafort, Rizal Commercial Banking Corp. (RCBC) chief economist, said the stock market is now down 6.8 percent in the year-to-date from its end-2024 close of 6,528.79.
Online stock trading platform 2tradeasia.com said the BSP might be “encouraged to be ahead of the rate cut curve” when it meets this week, as it has more counter space to work with, compared with regional peers.
“While the second quarter rate cut has been alluded to earlier, markets must acknowledge the presence of external risks as significant limiting factors, at least in the short-term,” it said.
A big factor in last week’s decline was the US’ new levies on trade partners, with the Philippines getting a 17 percent tariff effective on April 3.
2tradeasia.com said that US President Donald Trump’s escalating rhetoric on tariffs and nationalistic trade policy continued to hammer global markets, with emerging Asian economies taking a big hit.
“As a result of this, more institutions are expected to downgrade growth projections for the region with trade output being heavily impaired by the tariffs,” it said.
“Industry and export-heavy Southeast Asia (e.g. Vietnam, Malaysia) are seen to bear the biggest shocks. Philippines’ relatively low tariff rate and consumption-driven output plus monetary policy will continue to insulate against the worst of the shock, but the extent to which these tariffs and restrictive trade policies become structural (for how long and for how deep) will play a crucial role in shaping foreign capital flows in the region for the rest of the year,” it said.
“Price reactions to event risks tend to be immediate, but these gradually filter into fundamentals. The added complexity in the current investment climate may prompt funds to sector-rotate if not totally reallocate, while macro events develop; stick to a disciplined gameplan to counter market turbulence,” it added.
Meanwhile, Abacus Securities Corp. said investors should stick to pure domestic plays and that it may be “prudent” to wait until market fears subside.
“While it’s true that exports are a small contributor to our overall GDP, and the direct impact on our exports may not be as large as other countries, the indirect impact of a protracted global trade war may become a concern down the line. This could result in slower global economic growth or even recessions for the US and those countries with increased tariffs. This may result in lower remittances, weakening domestic consumer strength,” it said.
“The silver lining is that resulting in lower global trade puts downward pressure on oil, which is still a big contributor to our local inflation and could mitigate the negative impact,” Abacus Securities said.
