PHL shares may rise before August inflation data

Philippine shares may climb this week as headline inflation likely slowed last month and returned within the Bangko Sentral ng Pilipinas’ (BSP) annual target.

On Friday, the bellwether Philippine Stock Exchange index (PSEi) rose by 0.08% or 5.99 points to end at 6,897.54, while the broader all shares index went up by 0.25% or 9.52 points to close at 3,742.81.

Week on week, the PSEi fell by 0.93% or 64.42 points from its 6,961.96 close on Aug. 22.

“Local equities took a breather after almost a month-long upward move ahead of the August inflation data release [this] week,” online brokerage firm 2TradeAsia.com said in a market note.

“Last week’s trading shows that the local market is having a difficult time getting past its 7,000 resistance level,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “On a positive note, the market has been maintaining its position above its 10-day exponential moving average.”

For this week, Philippine stocks may climb before the release of the August inflation report on Sept. 5 (Thursday), he said.

“The market could move with an upward bias on the back of expectations that the Philippines’ August inflation print would be lower than July’s 4.4%. Confirmation of the said expectations may also somehow give the market a boost in the latter part of the week,” he added.

A BusinessWorld poll of 15 analysts yielded a median estimate of 3.7% for the August consumer price index, within the BSP’s 3.2%-4% forecast for the month.

If realized, this would be slower than the nine-month high of 4.4% in July, which also marked the first time since November 2023 that headline inflation exceeded the BSP’s 2-4% goal. This would also be below the 5.3% print recorded in August 2023.

“Investors are also expected to take cues from other economic data, including the peso’s movement against the dollar, the S&P Global Philippines’ Manufacturing Purchasing Managers’ Index for August, and the Philippines’ labor force figures for July,” Mr. Tantiangco added.

He put the PSEi’s major support at 6,700-6,800.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the market’s resistance is at the 7,000 level, particularly the high of 7,070.72 posted on April 2.

“The underlying upward trend for more than three weeks already remains intact for as long as it remains above the immediate support at 6,635 to 6,705 levels,” he said.

2TradeAsia.com placed the PSEi’s immediate support at 6,800 and resistance at 7,000.

“Two-thirds into the year and at the tail end of the ghost month, the PSEi remained just beneath 7,000. Evolving geopolitical downside risks should provide additional short-term friction on top of supply pressure,” it said. “However, in the long run, lower interest rates mean cash returns are coming back to earth, and ultimately, the excess cash should find their way back home to equities.” — Revin Mikhael D. Ochave