PSEi ends above 7,500, posts near five-year high

Philippine shares surged to the 7,500 level on Monday to post their best close since January 2020 as inflation slowed to an over four-year low in September, giving the central bank space to bring down borrowing costs further.

The bellwether Philippine Stock Exchange index (PSEi) rose by 1.16% or 86.76 points to 7,554.68 on Monday, while the broader all shares index climbed by 1.02% or 41.32 points to 4,082.97.

Monday’s finish was the PSEi’s best close in almost five years (over 56 months) or since it ended at 7,587.63 on Jan. 27, 2020.

The main index also reached an intraday high of 7,604.61 during Monday’s session.

“Strong buying interest, including net foreign inflows of PHP 1.35 billion, propelled the market to its highest close since Jan. 27, 2020, as investors reacted to the combination of a surprisingly low Philippine headline inflation and a positive US jobs report,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“The local market rose further this Monday. Investors continued to cheer the significant slowdown of the Philippines’ inflation last September as it strengthens the case for further monetary policy easing by the Bangko Sentral ng Pilipinas (BSP),” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco likewise said in a Viber message. “Hopes that the Fed will also deliver more rate cuts also spurred optimism.”

Philippine headline inflation slowed to 1.9% in September from 3.3% in August and 6.1% a year ago, the government reported on Friday.

This was the slowest pace seen in over four years or since the 1.6% print in May 2020. It was also below the BSP’s 2%-2.8% forecast for the month and the 2.5% median estimate yielded in a BusinessWorld poll of 15 analysts.

Analysts have said the improving inflation outlook will give the BSP more than enough room to further reduce benchmark rates.

BSP Governor Eli M. Remolona, Jr. last week said the Monetary Board can deliver a 25-basis-points cut at its Oct. 16 meeting, followed by another at its Dec. 19 meeting.

The BSP in August cut benchmark borrowing costs by 25 bps to kick off its easing cycle, bringing its policy rate to 6.25%.

Majority of sectoral indices ended higher on Monday. Property went up by 2.04% or 60.64 points to 3,025.70; services rose by 1.89% or 43.48 points to 2,337.06; industrials climbed by 1.21% or 120.79 points to 10,054.26; and holding firms increased by 1.2% or 76.34 points to 6,405.78.

Meanwhile, financials dropped by 0.46% or 11 points to 2,382.77, and mining and oil lost 0.39% or 35.57 points to end at 9,042.29.

Value turnover rose to PHP 7.87 billion on Monday with 1.36 billion shares traded from PHP 6.14 billion with 792.47 million issues exchanged on Friday.

Advancers outnumbered decliners, 129 to 79, while 49 names ended unchanged.

Net foreign buying surged to PHP 1.35 billion on Monday from PHP 607.93 million on Friday. — R.M.D. Ochave