Investors are expected to hunt for bargains this week as they await the Bangko Sentral ng Pilipinas’ (BSP) interest rate policy decision, with analysts citing muted trading leads and cautious sentiment.
BSP Governor Eli Remolona has reiterated dovish signals in recent weeks, citing “benign inflation and external uncertainties that could slow local economic growth,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.
The Monetary Board is set to release its decision on Thursday, August 28.
Ricafort noted that Remolona also hinted at stronger intervention in the foreign exchange market if the peso continues to weaken.
The benchmark PSEi closed last week 0.37 percent lower at 6,315.93, while the broader All Shares shed 0.43 percent to 3,751.23.
Foreign funds were net buyers, posting P1.22 billion in inflows after total purchases of P20.29 billion against P19.07 billion in sales.
The local market has been “alternately moving between gains and losses for 10 weeks as investors remain indecisive of its direction,” Japhet Tantiangco, research manager at Philstocks Financial, said.
He noted that the market’s current price-to-earnings ratio of 10.9x is well below its five-year average of 17.3x and the regional average of 17.4x.
“With the market at attractive levels, we may see bargain hunting in next week’s trading,” Tantiangco said over the weekend. “A strong rally is not expected unless fresh positive leads emerge.”
Online trading platform 2TradeAsia.com said corporate earnings have largely met expectations, with the banking and consumer sectors showing strength. Still, capital has partly shifted to bonds and alternatives, reflecting anticipation of a BSP easing cycle.
“The key forward-looking catalyst remains the BSP,” 2TradeAsia said, noting that a decisive shift to an accommodative stance would be needed to cut borrowing costs, lift earnings forecasts and spark a broader market re-rating.
