BETS on monetary policy easing at home and abroad led investors to snap up bank stocks including the Bank of the Philippine Islands (BPI), making it one of the most actively traded last week.

From July 15 to 19, Philippine Stock Exchange data showed a total of P4.643 billion out of 52.720 million BPI shares having exchanged hands on the trading floor.

BPI shares closed at P93 apiece on Friday, up 14.7% from July 12’s closing share price of P81.05 per share. Year-to- date, it is down 1.1%.

Shares in the Ayala-led bank closed on Friday at P93 apiece, up 14.7% week on week from the P81.05 finish on July 12. BPI’s traded shares have been on an uptrend last week, reaching 20.561 million shares on Tuesday.

Luis A. Limlingan, head of sales of Regina Capital Development Corp., noted several factors that contributed to BPI’s stock price movement.

“For one, the Philippine Stock Exchange index (PSEi) crossed into bull market territory just [last] week, so on average, stocks were bought up,” he said in an e-mail interview.

“In addition, there were several comments made by the US Federal Reserve recently regarding the reduction of rates. This would make our financial system more competitive globally because of the interest rate differential. The first movers are normally the banks in this regard,” he added.

Mr. Limlingan noted a similar trend with BDO Unibank, Inc., which was heavily bought in previous sessions and closed to as high as P154 per share.

“Perhaps, in this case, it was BPI’s turn,” he said.

Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan said: “It is backed by net foreign buying for the past five days at P2.31 billion to its prior five days of the same period at [a net foreign buying of] P19.04 million.”

Mr. Tan added that investors are also looking ahead to the release of second quarter earnings reports.

BPI’s net income attributable to parent was up 7.6% to P6.72 billion in the first three months of the year, as revenues grew 23.5% to P22.78 billion boosted by the strong performance of its core banking business. Its net interest income improved by 29% to P16.1 billion, supported by an 8.8% increase in average asset base.

Regina Capital’s Mr. Limlingan said that BPI’s first-quarter performance “remains in line” with their estimates of P6.01 billion for the period.

For his part, Philstocks’ Mr. Tan noted that while BPI’s fundamentals are “not as attractive” compared to the other three member banks in the PSEi such as BDO, Metropolitan Bank & Trust Co., and Security Bank Corp., the cuts in the banks’ reserve requirement ratio (RRR) “may induce more money for banks to loan” thus, increasing BPI’s loan income and its loan portfolio on the consumer retail side.

After a 100-basis-point (bp) RRR cut across all banks on May 31, the Bangko Sentral ng Pilipinas trimmed the reserve ratios of universal and commercial lenders and thrift banks by another 50 bps on June 28 to 16.5% and 6.5%, respectively.

Another 50-bp reduction will be implemented on July 26 to finally bring the RRR of big banks to 16% and thrift banks to 6%, which completes the phased cuts the BSP announced in May.

Meanwhile, in the US, the Fed is expected to cut rates for the first time in a decade at its July 30-31 policy meeting. Fed chair Jerome Powell hinted on a cut in benchmark rates, saying it will “act as appropriate” to sustain economic expansion.

For Mr. Tan, BPI’s share price “may go its upward momentum” given that both fundamental and technical indicators “are biased towards the bullish side.” The analyst likewise cited the stock’s high volume turnover and net foreign buying as key indicators for this outlook.

On the other hand, PNB Securities, Inc. President Manuel Antonio G. Lisbona said that the rise in BPI’s share price “will likely prompt some profit taking from short-term investors and could increase volatility for the coming sessions,” noting that the current market price is way above their estimated fair value for BPI at P70.85 per share.

For Regina Capital’s Mr. Limlingan, this week’s trading session would probably be driven by the reaction from today’s State of the Nation Address and “any early release of earnings.”

Should they come as expected or better, Mr. Limlingan looked at BPI to “trade sideways with an upward bias.”

Mr. Limlingan placed the stock’s support at P90 per share and resistance at P94.5 per share.

Meanwhile, Philstocks’ Mr. Tan has BPI’s primary and secondary support levels at P90 per share and P88 per share, respectively. On the other hand, the stock’s primary and secondary resistance levels are pegged at P96 and P100.

For PNB Securities’ Mr. Lisbona, BPI’s resistance is pegged at P95.7 per share.

“Chart wise, there’s a lot of support at P90 (per share) and P85.75 (per share)… The divergence between the volume of shares traded versus the price for the past couple of days implies a weakening in the underlying demand,” he said. — Lourdes O. Pilar