PSEi may rise on expectations of slower inflation

Philippine stocks may rise this shortened trading week, with the release of November inflation data expected to be a major catalyst for the market.

The Philippine Stock Exchange index (PSEi) went up by 21.45 points or 0.34% to close at 6,245.18 on Friday, while the broader all shares index climbed by 4.39 points or 0.13% to end at 3,332.22.

Week on week, the PSEi dropped by 24.32 points or 0.39% from its close of 6,269.50 on Nov. 24.

“A growing number of investors are piecing together a picture of a potentially good December for stocks. That narrative will be tested this week as the market turns its focus to the Philippine November inflation print and October US jobs data,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“The upcoming week will be another four-day trading week, but the release of November inflation data early on should help spark some excitement before discussion once again moves to monetary policy talks mid-December,” online brokerage 2TradeAsia.com said in a report.

The market will be closed on Friday for a holiday in commemoration of the Feast of the Immaculate Conception.

November consumer price index (CPI) data will be released on Tuesday. A BusinessWorld poll of 15 analysts yielded a median estimate of 4.4% for November headline inflation, at the midpoint of the 4-4.8% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

If realized, November CPI would be slower than the 4.9% print in October and the 8% logged in the same month last year.

However, November would also mark the 20^th straight month that inflation exceeded BSP’s 2-4% annual target.

The Monetary Board will hold its final policy meeting for the year on Dec. 14.

The BSP has raised borrowing costs by 450 basis points since May 2022 to help bring down inflation, with its policy rate now at a 16-year high of 6.5%.

The strong factory activity report released on Friday is also expected to boost sentiment when trading starts this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 52.7 in November from 52.4 in October amid robust demand and growth in new orders and production, a report released on Friday showed.

A PMI reading above the 50 mark denotes an improvement in operating conditions, while a reading below 50 signals deterioration.

For this week, 2TradeAsia.com placed the PSEi’s support at 6,100-6,150 and resistance at 6,400.

“Major support is still seen at 6,000 while major resistance is seen at 6,400,” Mr. Tantiangco said.

“The market may see continued consolidation in the 6,200 area and could potentially make an attempt for 6,380 in case of positive news flows,” Mr. Colet added. — S.J. Talavera