Share prices are expected to extend gains this week on follow-through buying, buoyed by investors’ anticipation of further rate cuts this year.
Japhet Tantiangco, research manager at Philstocks Financial Inc., said last week’s US Fed rate cut triggered gains that “almost covered three weeks of losses as investors cheered the Federal Reserve’s latest policy move and outlook.”
The PSEi rose 2.54 percent week-on-week to 6,264.49 on Friday, from the previous 6,109.21.
The broader All Shares closed at 3,740.81, up 1.5 percent from a week earlier. Foreign funds were net buyers at P353.41 million.
“This week, the market may try to extend its gains, supported by hopes of more Fed rate cuts within the year, as these may drive Wall Street higher and local bond yields lower — both positive for the local market,” Tantiangco said. He added that Fed easing also raises expectations for more policy moves by the BSP.
He noted the PSEi now trades at a price-to-earnings ratio of 10.8X, below its five-year historical average of 17.3X and the regional average of 18.2X. “At the moment, the PSEi still has the lowest PE ratio among peers,” he said.
Online stockbroker 2TradeAsia.com said the Fed’s 25-basis-point cut sets a “dovish tone” for the rest of the year, with dot plots signaling an additional 50 basis points of easing in November and December. It added that the unwinding of the US Treasury yield curve signals fading recession fears and should support global risk assets, including emerging markets.
2TradeAsia.com also cited Finance Secretary Ralph Recto’s projection that the BSP will cut rates by 25 basis points each in October and December, helped by a benign August inflation rate and 6.3 percent second-quarter growth.
“With lower financing costs fueling corporate earnings, and stronger GDP growth cadence into 2026, better fundamentals should push the PSEi to re-rate above its current 11X forward P/E band,” it said.
