PHL shares may rise after BSP policy easing hints

PHILIPPINE STOCKS could rise this week following the Bangko Sentral ng Pilipinas’ (BSP) decision to maintain its benchmark interest rates for a fifth straight meeting and hints on a rate cut as early as August.

On Friday, the benchmark Philippine Stock Exchange index (PSEi) fell by 0.14% or 9.51 points to end at 6,618.69, while the broader all shares index declined by 0.01% or 0.37 point to close at 3,524.15.

Week on week, however, the PSEi rose by 1.64% or 106.76 points from its 6,511.93 close on May 10.

“As expected, local interest rates were kept unchanged, but ‘less hawkish’ comments roused some positive energy in what [was] mostly a range-bound week,” online brokerage firm 2TradeAsia.com said in a market note.

The Monetary Board on Thursday left its target reverse repurchase rate unchanged at a 17-year high of 6.5%, as expected by 17 out of 19 analysts in a BusinessWorld poll. Interest rates on the overnight deposit and lending facilities were likewise kept at 6% and 7%, respectively.

BSP Governor Eli M. Remolona, Jr. said after the meeting that they are now “somewhat less hawkish than before” and could cut rates by the third or fourth quarter of this year. He said they expect one or two 25-basis-point rate cuts within the second semester.

The policy-setting Monetary Board’s only meeting for the third quarter is scheduled on Aug. 15. Meanwhile, in the fourth quarter, it will hold reviews on Oct. 17 and Dec. 19.

The BSP’s policy decision and comments could push Philippine stocks higher this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. 

“The prospects of a possible rate cut by the BSP as early as August following their less hawkish stance in their latest meeting may also give sentiment a boost next week. With these, the market could move with an upward bias,” Mr. Tantiangco said.

“Looking at the bigger picture, however, the market has been moving sideways since mid-April, showing investors’ indecisiveness as they weigh hopes against lingering risks in the market. At its current level, the local market is still deemed to be attractive. Hence, episodes of bargain hunting are still possible in [this] week’s trading,” he added.

Mr. Tantiangco placed the market’s support at 6,400 and resistance at 6,700.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort put the PSEi’s one-month support at 6,540 and major resistance at 6,740-6,820.

2TradeAsia.com placed the PSEi’s immediate support at 6,400, primary resistance at 6,700, and secondary resistance at 6,800.

“The volatile week has been hard carried by mixed earnings plus speculation on how solid a pivot by third quarter could be: a test of grit until the Fed (US Federal Reserve) and ultimately, the BSP, eventually bring rates back down to earth,” the online brokerage said. — Revin Mikhael D. Ochave