PSEi under pressure ahead of key rate decision
By Revin Mikhael D. Ochave, Reporter
Philippine stocks are expected to be under pressure this week from profit taking after advancing for five straight days and ahead of the central bank’s policy meeting on Thursday, analysts said at the weekend.
“With already three straight weeks of rising, we may see strong selling pressures next week, driven by profit taking,” Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc., said in a Viber message.
“On a positive note, the favorable economic data we’ve recently seen including the slowdown in inflation in January and the strong December labor force survey results might help sustain the market’s positive sentiment,” he added.
Mr. Tantiangco said the Philippine Stock Exchange index (PSEi) could retest 6,700 to 6,800.
“Investors are expected to look for further catalysts that would add reasons to the optimism. Primarily, investors are expected to look forward to our fourth-quarter and full-year corporate results,” he added.
The main index gained 0.29% or 20.12 points to close at 6,850.16 on Thursday. The broader all-share index added 0.2% or 7.45 points to 3,574.21.
Week on week, the PSEi went up by 2.13% or 142.91. Markets were closed on Friday for the Chinese New Year.
“The PSEi is greeting the Year of the Wood Dragon at the 6,800 level, with optimism stemming from January inflation being the lowest in three years,” online brokerage 2TradeAsia.com said in a market report.
Investors would monitor the Bangko Sentral ng Pilipinas (BSP) policy meeting, Juan Paolo E. Colet, managing director at China Bank Capital Corp., said in a Viber message.
The BSP kept the key rate steady at a 16-year high of 6.5% at its December meeting after raising it by 450 basis points from May 2022 to October 2023 to tame inflation.
Inflation eased to 2.8% in January due to slower price increases of food and nonalcoholic beverages.
“The BSP is very likely to keep its policy rate unchanged while maintaining a hawkish tone in view of upside risks to domestic inflation,” Mr. Colet said.
“Given that many market participants do not expect the BSP to cut rates ahead of the US Federal Reserve, investors will pay close attention to how this week’s US inflation print will feed into the timing of a dovish shift in US monetary policy,” he added.
He said the stock market has had a good run so far but would face increased pressure to consolidate below the psychological resistance of 7,000.
2TradeAsia.com placed the market’s immediate support at 6,700 points and resistance at 7,000.
“It took the PSEi nearly one year to revisit the 6,800 level,” the brokerage said. “A run towards 7,000 in the short term will be on the back of more active trading volumes and positive fourth-quarter earnings/first half outlook over [this] week’s earnings call.”
