Bargain hunting likely as PSEi enters bear market

PHILIPPINE STOCKS may get a lift from bargain hunting this week after it fell into bear market territory on Friday, with the market also awaiting the release of January inflation data.

On Friday, the Philippine Stock Exchange index (PSEi) plummeted by 4.01% or 245.07 points to 5,862.59, while the broader all shares index retreated by 2.19% or 79 points to 3,520.32.

This marked the benchmark’s worst close in 27 months or since its 5,853.63 finish on Oct. 12, 2022. This also put the PSEi in bear territory as this represents a decline of more than 20% from its latest recorded peaks, which are the 7,604.61 intraday high and the 7,554.68 close on Oct. 7, 2024.

Week on week, the PSEi was down by 6.89% or 433.61 points from its 6,296.20 finish on Jan. 24, marking its fourth straight weekly decline.

“The PSEi broke below 6,000 for the first time since 2022 after 2024 gross domestic product (GDP) missed the target range and the Federal Reserve implied a ‘no-cut’ stance in the medium term,” online brokerage firm 2TradeAsia.com said in a market note.

Philippine GDP expanded by 5.6% in 2024, falling short of the government’s 6-6.5% target but slightly faster than 5.5% in 2023, the local statistics agency reported on Thursday.

Meanwhile, the US central bank kept its target rate at the 4.25%-4.5% range at the close of its two-day meeting on Wednesday, with Fed Chair Jerome H. Powell signaling cautiousness on further policy easing.

“With four straight weeks of decline, we expect bargain hunting to ensue. However, we may not see a complete turnaround yet as sentiment could remain bearish,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Investors could still be concerned with how the Philippine economy would be this 2025 following its below target performance last year, and how the BSP (Bangko Sentral ng Pilipinas) can help given that the Fed is slowing down with its policy easing. Adding to the worries is the uncertainties in the US’ foreign policies,” he added.

The Philippine central bank may cut benchmark rates by 50 basis points (bps) this year in a gradual manner as “policy insurance” against risks, BSP Governor Eli M. Remolona, Jr. said on Saturday.

Mr. Remolona said the reductions could be implemented in increments of 25 bps each in the first and second half of the year.

He also said on Friday that a rate cut is “on the table” at their Feb. 13 policy meeting, with economic growth “a little bit below capacity.”

“If the [output] gap is widening, if it becomes more negative, then it would call for more easing,” Mr. Remolona said.

The Monetary Board has slashed benchmark borrowing costs by 75 bps since kicking off its easing cycle in August last year, bringing the policy rate to 5.75%.

Mr. Tantiangco put the PSEi’s trading range for this week between 5,700 and 6,000.

For its part, 2TradeAsia.com placed the PSEi’s support at 5,800 and resistance at 6,000. — Revin Mikhael D. Ochave