Stocks may take cue from govt’s vaccine rollout

PHILIPPINE shares would probably take their cue this week from the government’s continued rollout of coronavirus vaccines and further lockdown easing, analysts said at the weekend.

Stocks may also move based on expectations of easing inflation, they said.

The Philippine Stock Exchange index (PSEi) could breach 7,000 points with “more positive news in both the vaccine supply and speed of vaccination, and inflation tempering,” Cristina S. Ulang, head of research at First Metro Investment Corp. said in a Viber message.

The stock index on Friday shed 0.53% or 36.54 points to close at 6,851.38, while the all-share index fell by 0.43% or 18.06 points to 4,166.90. It lost 56.41 points from a week earlier.

The index rose before June 15 as investors expected the government to ease quarantines amid falling coronavirus infections, Aniceto K. Pangan, a trader at Diversified Securities, Inc. said in a mobile phone message.

But the growth outlook turned sour as investors took profits after the US Federal Reserve signaled future benchmark interest rate increases, he added.

The US central bank delivered a strong message on Wednesday when Fed Chairman Jerome Powell said officials have discussed tapering bond buying. Fed officials also added two rate increases to their 2023 forecast, where there was none before.

Ms. Ulang said the Fed statement had triggered a “correction from the top.” The mild correction suggests that the market needs good news on the vaccine and inflation fronts for the index to go above 7,000 she added.

The Philippine central bank would probably keep a loose monetary stance to support economic recovery as inflation risks subside by next year, Monetary Board Member Felipe M. Medalla said on June 12.

The inflation spike was temporary, he said, adding that inflation would be close to 3% from more than 4% now. May inflation was unchanged at 4.5% for the third straight month.

The policy-setting Monetary Board is set to meet on June 24. It maintained the key policy rate at a record low of 2% on May 13.

The government eased the lockdown in Metro Manila and Bulacan last week, putting it under a general community quarantine with some restrictions until the end of the month. The provinces of Rizal, Laguna and Cavite remained under a general lockdown with heightened restrictions.

About 1.5 million more doses of CoronaVac arrived from China on Thursday, the third delivery this month. Another batch of 24 million doses is expected to arrive on June 24.

Meanwhile, the arrival of 250,000 doses of the vaccine made by Moderna, Inc. was delayed to June 25.

The country will also receive about two million doses of the vaccine from AstraZeneca Plc and 150,000 shots of Sputnik V from Russia. 

The government has given out more than 8 million coronavirus vaccine doses since its vaccination drive started in March.

“The arrival of more vaccines and the pickup in the vaccination drive in some local government units will refocus investors to the promise of local reopening and improving growth prospects,” FMIC’s Ms. Ulang said.

The Health department reported 6,959 coronavirus infections on Saturday, bringing the total to 1,35 million.

“We may see investors continue their profit taking mode next week, with the index immediate support at 6,700 and the psychological resistance at 7,000,” Mr. Pangan said. — Keren Concepcion G. Valmonte