Stocks extend rally on strong remittance outlook

Philippine stocks extended their rally to a third straight day on Wednesday amid a strong outlook for overseas Filipino remittances this year, which could boost the economy.

The Philippine Stock Exchange index (PSEi) increased by 58.08 points or 0.87% to end at 6,679.96 on Wednesday, while the broader all shares index rose by 17.88 points or 0.51% to close at 3,511.44.

“The positive outlook for Philippine remittances, expected to grow by 3% this year despite overseas concerns, contributed to boosting market sentiment,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The local bourse extended its gains, rising by 58.08 points to 6,679.96 lifted by the foreign investors, registering a net inflow of PHP 341.09 million,” Ms. Alviar added. 

The BSP expects remittance growth of 3% in 2023 and 2024.

For January to November, cash remittances coursed through banks rose by 2.8% to USD 30.211 billion from USD 29.38 billion a year ago, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

The World Bank in its latest Migration and Development brief projected remittance flows to expand by 5% to USD 42 billion this year.

Remittances account for 10% of the Philippines’ gross domestic product (GDP), the World Bank said.

“The market is up on hopes for accelerating quarterly gross domestic product growth, with the fourth quarter 2023 data out next week and downtrending January inflation, likely inching down to mid-target,” First Metro Investment Corp. Head of Research Cristina S. Ulang added in a Viber message. 

Fourth quarter and full-year 2023 Philippine GDP data will be released on Jan. 31.

Meanwhile, on Monday, BSP Governor Eli M. Remolona said inflation is projected to slow further in January from the 3.9% print in December due to base effects, which could also drive inflation down in February or March.

Inflation peaked at 8.7% in January last year as food prices soared. It has since come down to a 22-month low in December.    

For 2023, inflation averaged 6%, slightly higher than 5.8% in 2022. This marked the second straight year that inflation breached the BSP’s 2-4% target.

The majority of sectoral indices ended higher on Wednesday, except for mining and oil, which fell by 87.68 points or 0.93% to 9,290.29. 

Financials climbed by 27.64 points or 1.48 points to 1,884.15; property improved by 24.36 points or 0.84% to 2,915.02; holding firms went up by 46.93 points or 0.74% to 6,370.33; services increased by 8.78 points or 0.54% to 1,626.41; and industrials rose by 31.61 points or 0.34% to 9,122.38.

Value turnover rose to PHP 5.64 billion on Wednesday with 343.17 million issues switching hands from the PHP 4.76 billion with 775.59 million shares seen the previous day. 

Advancers edged out decliners, 90 against 86, while 65 names closed unchanged.

Net foreign buying stood at PHP 341.09 million on Wednesday versus the PHP 421.62 million in net selling seen on Tuesday. — R.M.D. Ochave