PHILIPPINE SHARES may rise this week as investors rebalance their portfolios before the year’s close and look towards 2024, focusing on the outlook for interest rates and the economy.

The Philippine Stock Exchange index (PSEi) climbed by 31.77 points or 0.49% to close at 6,501 on Friday, while the broader all shares index rose by 23.04 points or 0.67% to end at 3,427.30.

Week on week, the PSEi climbed by 22.56 points or 0.35% from its 6,478.44 close on Dec. 15.

Philippine financial markets were closed on Sept. 25-26 due to non-working days for Christmas.

“The final three trading days of the year will see a mix of window dressing and bargain hunting, with the index poised to end 2023 on a positive note,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“The local rally in stocks is still driven mainly by growing expectations of interest rate cuts next year even after the Bangko Sentral ng Pilipinas (BSP) has signaled that policy may need to remain tight for some time,” Mr. Colet added.

The local bourse may move sideways this week as investors cautiously assess the economic and monetary policy outlook for next year, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“The upside risks to inflation due to supply side issues and the tighter for longer monetary policy of the Bangko Sentral ng Pilipinas, all of which may slow down our economic growth, may weigh on sentiment,” Mr. Tantiangco said.

“In the last week of the year, investors are also expected to still watch out for further catalysts that could give us a clearer picture of how our economy would be in 2024,” he added.

The BSP is unlikely to start policy easing in the next few months and will only consider cutting rates if inflation settles at the midpoint of the 2-4% target, its chief said last week.

“We’re unlikely to cut rates in the next few months. We’re in a higher for longer (scenario). When I say hawkish, that basically means high for a while,” BSP Governor Eli M. Remolona, Jr. said.

The Monetary Board this month kept its benchmark rate at a 16-year high of 6.5% for a second straight meeting. Interest rates on the overnight deposit and lending facilities were also left unchanged at 6% and 7%, respectively.

From May 2022 to October this year, the BSP raised borrowing costs by a cumulative 450 basis points to tame inflation.

Meanwhile, the Development Budget Coordination Committee set next year’s gross domestic product growth goal at 6.5-7.5%.

There may be “more buoyant movement” in the market in the coming sessions as December and January have historically been “the most successful trading months for the benchmark index,” online brokerage said in a report.

For this week, put the PSEi’s support at 6,350 and resistance at 6,600, while Mr. Tantiangco sees the benchmark index trading between 6,400 and 6,700. — S.J. Talavera