PHL shares seen rebounding after BSP rate hike

By Arra B. Francia
Reporter
SHARES may move upward in the week ahead as investors react to the Bangko Sentral ng Pilipinas (BSP)’s latest move to counter inflation, while awaiting the release of September consumer price index data.
The bellwether Philippine Stock Exchange index (PSEi) fell 0.60 % or 43.77 points to 7,276.82 last Friday, pulling the market down by 1.44% or 129.88 points on a weekly basis. The industrial and property sectors led the decrease, slumping 4% and 2%, respectively.
Net foreign selling was steady at P1.75 billion for the week, while turnover reached P23.70 billion.
“This is the fourth week in a row that the index ended in the red which has brought prices back down to more attractive levels. Based on the technicals, there is indication that the selling is exhausted, and we may see the index end in the green [this] week,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market note.
Mr. Mangun noted investors may see the BSP’s decision to hike rates by another 50 basis points as a positive move, indicating that the government is doing something to address the rising prices of goods and services.
The Philippine Statistics Authority will be releasing its September inflation reading on Friday, Oct. 5. The central bank projects inflation to be at 6.8%, or within the range of 6.3-7.1% range. Should this be realized, this will be the highest recorded since February 2009’s 7.2%. Meanwhile, the Department of Finance expects no change from August’s inflation print of 6.4%.
In the eight months ending August, inflation has already reached 4.8%, well beyond the government’s target range of 2-4% for the year.
Online brokerage 2TradeAsia.com said there are indications inflation could spike further because of Typhoon Ompong’s impact on agricultural products. The Department of Agriculture said that the typhoon ravaged P26.7 billion worth of crops. The Department of Public Works and Highways also said the typhoon caused damage on P7 billion worth of public infrastructure.
“While investors will consider the volatile nature of agri items on the consumer basket, several will take heed on the effectiveness of fiscal measures to mitigate the spike, which includes boosting supply via importation of key staple items (i.e., rice, fish, poultry, meat),” 2TradeAsia.com said in a weekly market note. “The market is also likely to give weight on timeline targets to cap inflation, at least ahead of BSP’s next policy meeting on [Nov. 15].”
The online brokerage also cited interest surrounding the telecom sector, as the government prepares to announce the third telco player by December. Investors will likewise be looking at the awarding of infrastructure projects such as airports, roads, and subways in order to measure companies’ spending plans.
Eagle Equities’ Mr. Mangun placed the market’s support at 7,000 to 7,200, with resistance from 7,500 to 7,840.