Stocks may climb as market awaits BSP decision

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THE Philippine Stock Exchange — PHOTO BY SANTIAGO J. ARNAIZ

PHILIPPINE SHARES may trade higher in the coming week amid the government’s release of its November inflation report and the rate cut announcement in the week that will follow.

The benchmark Philippine Stock Exchange index (PSEi) closed the previous month at 7,738.96, shedding 29.7 points or 0.38% at the end of trading on Friday.

On a weekly basis, it fell 79 points or 1.02% to 7,738, marking the third straight week that the main index has declined.

Online brokerage attributed last week’s poor performance to tensions between United States and China after US President Donald Trump signed a law supporting human rights protection in Hong Kong.

It also noted there was limited movement across global equities last week as most funds were “on Thanksgiving break.”

Value turnover at the local bourse from Nov. 25-29 increased 49% to P7.79 billion, as net selling from foreign investors jumped to an average of P2 billion from P646 million the week prior.

“Locals will keep in touch with November inflation next week (Dec. 5), with the BSP’s (Bangko Sentral ng Pilipinas) last policy meeting for this year (Dec. 12) in mind,” said in a market note e-mailed Friday.

The overall rise in prices of widely used goods likely quickened in November, the central bank said on Friday, citing higher electricity and fuel costs.

In a statement, the BSP Department of Economic Research pegged November inflation to fall between 0.9-1.7%.

The range is beyond the 0.8% print in October. However, it is slower than the 6% logged in November 2018. noted that BSP Governor Benjamin E. Diokno earlier signalled a possible rate cut in the Monetary Board’s last policy meeting for the year on Dec. 12, which, if it happens, may help influence firms’ capital expenditures (capex) before the year ends.

“A relatively foggy December stands between now and 2020, with macro forces resting uneasy on US & China’s next moves, plus seasonally thin volumes, as the Yule break mounts. However, bargain-hunting opportunities may present themselves during such lulls, especially in the context of local firms’ capex buildup, in tandem with on-time public spending budget for 2020,” the online brokerage said.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan also said the local bourse may take cues this week from the Nikkei Purchasing Managers’ Index (PMI).

“Last few weeks have been underwhelming and index has been trying to cling to 7,800 level. The Nikkei PMI and inflation may push this,” he said in a mobile message Sunday.

He added US data such as ISM (Institute for Supply Management) manufacturing, initial jobless claims, durable goods orders, trade balance and unemployment rate may be factors that will influence market sentiment, apart from any developments on the US-China trade talks. — Denise A. Valdez