Investors are expected to pick bargains after a two-week selloff, with no credible market catalysts seen leading a significant rally.
Philstocks Financial Inc. zeroed in on cheap valuations that may prompt bargain hunting this week. “The local market remains undervalued,” it said.
Still weighing on the market are domestic inflation risks, cheap valuations, infrastructure and election spending, not to mention US President Donald Trump’s trade war, said Jonathan Ravelas, managing director at eManagement for Business and Marketing Services.
Any indication of an uptick will be met with selling pressure, he said.
“The ‘when in doubt, pull out’ strategy is still practical. Sell on strength,” Ravelas added.
The bellwether PSEi lost 51.86 points or 0.85 percent at 6,061.33 on Friday, largely blamed on the Bangko Sentral ng Pilipinas’ (BSP) decision to keep policy rates steady during the Monetary Board meeting on Thursday. Week-on-week, the PSEi dropped 99.66 points or 1.52 percent from 6,154.99.
Investors were expecting the central bank to cut policy rates by 25 basis points.
The BSP’s decision was “no surprise,” considering the “concentrated geopolitical and inflationary risks in the first quarter,” said online stockbroker 2TradeAsia.com.
“External events as of late are not supportive of any dramatic changes in policy, lest central banks be cornered by runaway global inflation. While the BSP assures that it has not exited this easing cycle, timing to the next rate cut has been implied to be pushed back until well into mid-year,” 2TradeAsia added.
The succeeding policy meetings are scheduled next April and in June.
Earnings continue to exceed expectations in an otherwise “dismal quarter plagued by escalating downside risks in the macro,” according to 2TradeAsia.
“US President Trump’s latest tariff moves and the BSP’s decision to keep policy rates unchanged may also continue to weigh on sentiment,” Philstocks said.
