LOCAL EQUITIES are seen to rise in the week ahead as investors get a boost from lower June inflation reported on Friday last week and expectations of better second-quarter earnings reports that are due to be released soon.

The 30-company Philippine Stock Exchange index (PSEi) edged up by 0.65% or 53.02 points to close at 8,117.94 on Friday. It was up by 1.48% or 118 points on a weekly basis, driven by property and industrials which jumped 2.5% and 2.4%, respectively.

Net foreign selling averaged P72 million, slimming from the week-ago P1.44 billion, on the back of an average turnover of P5.82 billion, 44% lower week on week.

“Slower inflation for June augurs well for consumer and investment spending, and would help support accommodative monetary policies from the local central bank,” online brokerage 2TradeAsia.com said in a market note.

The Philippine Statistics Authority reported on Friday that inflation eased to 2.7% in June from 3.2% in May and the year-ago 5.2%, marking the slowest pace in a year and 10 months.

That brought the year-to-date inflation average to 3.4%, lower than 4.3% in 2018’s first half and closer down to the midpoint of the central bank’s 2-4% target for 2019.

Alongside slower inflation, the online brokerage noted that the economy has yet to absorb the liquidity boost unleashed by the Bangko Sentral ng Pilipinas’ 200-basis-point reserve requirement ratio cut in May, which helps further bring down borrowing costs.

“Overall, this helps embolden listed companies’ capex rollout plan for the remainder this year, and allow most to undertake potential joint ventures as well as mergers and acquisitions,” 2TradeAsia.com explained.

Investors are also on the lookout for the round of corporate earnings that will be released now that the first half of the year is over.

“Review for first semester earnings is in place and guidance for second half is watched out for,” 2TradeAsia.com said, adding that the energy, consumer and property sectors may get a boost from stonger demand.

“This early, several are anticipating improved second-quarter GDP (gross domestic product data that will be released on Aug. 8) on the back of approved fiscal budget plus higher consumer spending.” — Arra B. Francia