PHILIPPINE SHARES may rise this week as the Bangko Sentral ng Pilipinas (BSP) is expected to cut benchmark interest rates for a fourth straight meeting.
On Friday, the benchmark Philippine Stock Exchange index (PSEi) fell by 1.39% or 86.98 points to close at 6,154.99, while the broader all shares index dropped by 0.63% or 23.41 points to 3,663.64.
Week on week, however, the PSEi went up by 5% or 292.4 points from its 5,862.59 close on Jan. 31.
“The PSEi managed to bounce back to the 6,000 zone the week after a reconstitution of the main index,” online brokerage 2TradeAsia.com said in a market note.
Changes to the 30-member PSEi took effect on Feb. 3. The market operator added AREIT, Inc. and China Banking Corp., replacing Nickel Asia Corp. and Wilcon Depot, Inc. after the 2024 index review.
Bargain hunting following the market’s decline to bear market territory on Jan. 31 also boosted the PSEi last week.
For this week, the market’s focus will be on the BSP’s first policy meeting of the year on Feb. 13 (Thursday), Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
“A cut in policy rates together with a dovish outlook is expected to give the market a boost,” Mr. Tantiangco said.
Recent dovish signals from BSP Governor Eli M. Remolona, Jr. have fanned expectations of another rate cut as early as this week’s policy review, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail.
A BusinessWorld poll showed that 19 out of 20 analysts expect the Monetary Board to reduce benchmark rates by 25 basis points (bp) this week, which would bring the policy rate to 5.5% from the current 5.75%.
Mr. Remolona earlier said that a rate cut is “on the table” at the Monetary Board’s Feb. 13 meeting.
He said they may slash benchmark interest rates by a cumulative 50 bps this year as “policy insurance” against risks, with the reductions likely to be done in 25-bp increments each in the first and second half.
The BSP has cut borrowing costs by 75 bps since kicking off its easing cycle in August last year, bringing the policy rate to 5.75%.
Mr. Tantiangco added that the peso’s recent rebound could also help boost the local bourse.
“This past week, we saw an appreciation of the peso against the dollar as well as a decline in our long-term Treasury yields. A continuation of this is expected to help the local market in advancing further,” he said.
On Friday, the peso closed at an over one-month high of P58.03 per dollar. Week on week, it climbed by 33.5 centavos from its P58.365 close on Jan. 31.
Mr. Tantiangco put the PSEi’s support at 6,150 and resistance at 6,400, while Mr. Ricafort pegged support at 6,000 and resistance at 6,275-6,530.
For its part, 2TradeAsia.com placed the market’s immediate support at 6,000 and resistance at 6,300-6,400. — R.M.D. Ochave
