Stocks rebound on dovish hints from BSP chief

Philippine shares rebounded on Thursday, with the main index hitting a new over two-year high, after dovish comments from the Bangko Sentral ng Pilipinas (BSP) governor.

The Philippine Stock Exchange index (PSEi) jumped by 1.3% or 96.12 points to end at 7,458.74 on Thursday, while the broader all shares index rose by 0.97% or 38.46 points to 3,978.10.

Thursday’s close was the PSEi’s best finish in over 31 months or since it ended at 7,502.48 on Feb. 9, 2022.

“After a brief pullback on Wednesday, the local market bounced back this Thursday. Optimism was fueled by cues of possible rate cuts from the BSP,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

The Monetary Board could slash rates by 50 basis points (bps) more this year via 25-bp cuts at its Oct. 17 and Dec. 19 meetings, BSP Governor Eli M. Remolona, Jr. said on Wednesday.

The BSP on Aug. 15 began its easing cycle with a 25-bp reduction, bringing its policy rate to 6.25% from the over 17-year high of 6.5%. This was the first time it cut rates in nearly four years.

If the Monetary Board delivers rate cuts worth 50 bps in its last two meetings, it would bring the benchmark rate to 5.75% by end-2024.

“Local shares recovered from a two-day slump, buoyed by the Asian Development Bank’s (ADB) decision to maintain its gross domestic product (GDP) growth forecast for the Philippines at 6% for 2024 and 6.2% for 2025,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “The ADB attributed this outlook to easing inflation and expected policy adjustments that could stimulate domestic demand.”

The multilateral bank’s Philippine GDP growth projection for this year is at the low end of the government’s 6-7% goal, while the forecast for 2025 is below its 6.5-7.5% target.

Philippine economic growth averaged 6% in the first half. To meet the lower end of the government’s target for the year, GDP must expand by 6% this semester.

The majority of sectoral indices closed higher on Thursday. Financials surged by 2.59% or 60.21 points to 2,384.69; holding firms rose by 1.07% or 67.08 points to 6,328.70; services went up by 0.94% or 21.03 points to 2,255.78; industrials climbed by 0.83% or 81.16 points to 9,821.05; and property inched up by 0.37% or 11.05 points to 2,988.45.

Meanwhile, mining and oil dropped by 0.34% or 30.19 points to 8,743.01.

“San Miguel Corp. was the day’s top index gainer, jumping 6.11% to PHP 89.50. Semirara Mining and Power Corp. was at the bottom, falling 1.48% to PHP 33.35,” Mr. Tantiangco said.

Value turnover rose to PHP 12.53 billion on Thursday with 1.18 billion shares changing hands from the PHP 8.05 billion with 1.07 billion issues traded on Wednesday.

Advancers outnumbered decliners, 111 to 80, while 61 names closed unchanged.

Net foreign buying surged to PHP 4.79 billion on Thursday from PHP 921.22 million on Wednesday. — R.M.D. Ochave