Stocks rebound on improving inflation outlook

Philippine shares rebounded on Wednesday amid an improved inflation outlook and before the release of key US economic data.

The benchmark Philippine Stock Exchange index (PSEi) rose by 0.23% or 15.85 points to finish at 6,876.52 on Wednesday, while the broader all shares index climbed by 0.23% or 8.57 points to close at 3,591.66.

“The local bourse bounced back by 15.85 points (0.23%) to 6,876.52 as optimism was spurred by the World Bank’s expectation that the Philippines’ inflation will likely stay within 2-4% this year,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“Strong earnings results from 2023 also provided positive sentiment,” she added.

Philippine inflation may settle within the 2-4% target band for every month in 2024, a World Bank official said on Tuesday, though it warned of the need to remain alert for risks to the outlook.

“We think it’s likely that inflation will stay over the whole year between 2-4%,” World Bank Philippines Senior Economist Ralph van Doorn said on Tuesday. “We know there are risks to it, but we’ll have to see if they materialize. If we see that these risks are becoming more concrete, then we will have to also make adjustments to our projections.”

Headline inflation decelerated to an over three-year low of 2.8% in January, marking the second straight month it fell within the Bangko Sentral ng Pilipinas’ target range of 2-4%.

“Philippine shares made some modest gains as investors braced for the release of the key inflation report due later this week… [The] personal consumption expenditures reading for January will be the main event on Thursday, as it’s the US Federal Reserve’s preferred measure of inflation,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Back home, the local bourse ticked up slightly ahead of the implementation of the MSCI rebalancing and the end of the month,” he added.

Sectoral indices were mixed on Wednesday. Financials climbed by 1.25% or 24.77 points to 2,005.65; property went up by 0.23% or 6.63 points to 2,883.88; and holding firms improved by 0.07% or 4.91 points to 6,447.41.

On the other hand, industrials fell by 0.25% or 23.67 points to 9,250.41; mining and oil dropped by 0.04% or 3.67 points to 8,548.22; and services retreated by 0.03% or 0.63 points to 1,755.28.

“Among the index members, BDO Unibank, Inc. achieved the top spot, increasing by 2.92% following its recent pullback while Century Pacific Food, Inc. had the biggest loss, dropping by 2.75%,” Ms. Alviar said.

Value turnover fell to PHP 4.73 billion on Wednesday with 379.4 million issues switching hands from the PHP 5.66 billion with 577.04 million shares traded the prior day.

Advancers beat decliners, 95 against 85, while 57 issues closed unchanged.

Net foreign buying dropped to PHP 27.86 million on Wednesday from PHP 77.08 million on Tuesday. — R.M.D. Ochave