Stocks rebound on slower-than-expected CPI

PHILIPPINE STOCKS rose on Friday to return to the 5,900 level as slower-than-expected November inflation helped improve market sentiment.

The Philippine Stock Exchange index (PSEi) climbed by 1.04% or 61.64 points to close at 5,949.22, while the broader all shares index rose by 0.55% or 19.03 points to end at 3,477.68.

However, week on week, the PSEi decreased by 73.02 points from its 6,022.24 close on Nov. 28.

“Caution permeated during the week, although a slight reprieve was felt Friday, as November’s inflation print turned softer versus estimates,” online brokerage 2TradeAsia.com said in a note.

“The local market bounced back as investors cheered the Philippines’ November inflation rate which came in at 1.5%, declining from the prior month’s 1.7%,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message on Friday. “The slowdown in the country’s inflation is seen to help in household consumption. It also gives the Bangko Sentral ng Pilipinas (BSP) more room to ease monetary policies.”

Philippine inflation eased more than expected in November due to a decline in food prices, the statistics agency said on Friday, giving the central bank policy room to maneuver, Reuters reported.

The consumer price index (CPI) rose 1.5% in November from a year earlier, below the previous month’s 1.7% rise and a 1.6% median forecast in a Reuters poll. That brought the year-to-date average to 1.6%, below the central bank’s target of 2% to 4%.

Last month’s slower inflation, driven by a 0.3% decline in food prices, may give the central bank flexibility when it reviews its policy on Dec. 11.

Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. said on Dec. 3 that the odds for another interest rate cut this week were higher with growth this year likely to settle between 4% and 5%, below a 5.5% to 6.5% target.

“The outlook for domestic economic growth has weakened,” the central bank said in a statement on Friday following the inflation data’s release.

The BSP has cut its policy rate at its past four meetings, taking it to a three-year low of 4.75%

Sectoral indices were split on Friday. Services jumped by 3.93% or 93.71 points to 2,476.34; property went up by 0.82% or 17.93 points to 2,202.49; and mining and oil rose by 0.47% or 66.39 points to 14,172.11.

Meanwhile, holding firms dropped by 0.45% or 21.07 points to 4,651.04; financials retreated by 0.15% or 2.99 points to 1,944.21; and industrials edged down by 0.07% or 6.72 points to 8,474.02.

Decliners outnumbered advancers, 95 to 83, while 69 names were unchanged.

Value turnover rose to P1.08 billion on Friday with 5.8 billion shares changing hands from P843.91 million with 6.54 billion issues traded on Thursday.

Net foreign selling went down to P598.26 million from P967.02 million. — with a report from A.G.C. Magno and Reuters