Shares climb on expectations of easing inflation

Philippine shares closed higher on the first trading day of 2024 as investor sentiment was lifted by expectations of slower inflation in December.

The benchmark Philippine Stock Exchange index (PSEi) jumped by 104 points or 1.61% to end at 6,554.04 on Tuesday, while the broader all shares index rose by 41.38 points or 1.2% to close at 3,465.97. 

“We welcome 2024 with hopes of a better performance for the stock market. We are also optimistic that our regulator will continue to support the initiatives we will introduce to boost participation and liquidity in the market,” PSE President and CEO Ramon S. Monzon said in a statement.

Shares rose on Tuesday as inflation likely slowed further last month, Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The possibility that inflation rate would settle within the 2-4% target of the government in December lifted market sentiment. Investors were also waiting for some economic data set to be released this week,” Ms. Alviar added. 

Headline inflation likely eased to 4% in December, according to the median estimate of a BusinessWorld poll conducted last week. This is within the 3.6-4.4% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

If realized, December would mark the first time that inflation met the BSP’s 2-4% target and the slowest since the 3% print in February 2022.

At 4%, December inflation would be a tad slower than 4.1% in November and significantly lower than 8.1% in December 2022.

This would bring the 2023 inflation average to 6%, matching the BSP’s baseline forecast.

The Philippine Statistics Authority will release December inflation data on Friday.

“The market’s rally is due to the seasonally strong period of New Year’s optimism and growing interest rate cut bets in 2024,” First Metro Investment Corp. Head of Research Cristina S. Ulang added in a Viber message.

The majority of sectoral indices climbed on Tuesday. Holding firms rose by 217.37 points or 3.56% to 6,323.37; services increased by 37.45 points or 2.33% to 1,642.44; industrials went up by 85.71 points or 0.94% to 9,161.62; and financials added 7.73 points or 0.44% to end at 1,746.61.

On the other hand, mining and oil fell by 114.50 points or 1.14% to 9,885.93, and property dropped by 19.33 points or 0.67% to 2,835.61. 

“The mining sector was at the bottom, down by 1.14%, weighed by the performance of Nickel Asia Corp., which declined by 3.83%,” Ms. Alviar said. 

Value turnover dropped to PHP 3.66 billion on Tuesday with 379.80 million issues switching hands from the PHP 4.88 billion with 1.12 billion shares seen on Friday.

Advancers outnumbered decliners, 100 to 77, while 47 names closed unchanged. 

Net foreign buying rose to PHP 443.11 million on Tuesday from PHP 208.97 million on Friday. — R.M.D. Ochave