Rate cut bets, corporate results to lift PHL stocks

PHILIPPINE SHARES could climb further this week amid expectations of further interest rate cuts by the Bangko Sentral ng Pilipinas (BSP) and as investors anticipate the release of more corporate results.

On Friday, the main Philippine Stock Exchange index (PSEi) rose by 0.2% or 15.4 points to 7,415.73, while the broader all shares index went up by 0.13% or 5.28 points to 4,081.52.

Week on week, the PSEi climbed by 1.44% or 105.41 points from the 7,310.32 close on Oct. 11.

“Despite the BSP’s 25 basis points (bps) rate cut, local equities kept to its range [last] week, amid the start of third quarter earnings reporting season,” online brokerage firm 2TradeAsia.com said in a market note. “The decision was largely expected and did little to move markets into any bold action — a reminder that prices move proactively as they do reactively.”

“The local market is having a hard time getting past the 7,400-7,500 resistance range as the weakening of the peso together with offshore uncertainties weigh on sentiment. Consequently, the market is being hindered from continuing its bull run,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said.

For this week, bargain hunting could cause Philippine stocks to rise, he said.

“The dovish monetary policy outlook of the Bangko Sentral ng Pilipinas is still expected to give the market support.”

The Monetary Board on Wednesday cut benchmark interest rates by 25 bps, as expected by 16 of 19 analysts in a BusinessWorld poll, as price pressures remain manageable. This brought its policy rate to 6%.

BSP Governor Eli M. Remolona, Jr. said they could cut benchmark rates by another 25 bps at their Dec. 19 meeting. He said they could slash rates by 100 bps in 2025, but prefer to take “baby steps” in their policy easing cycle.

“More catalysts could be needed, however, for the market to get past the 7,400-7,500 range. In line with this, investors are expected to look forward to the corporate sector’s third quarter reports. Upbeat corporate results are seen as one of the possible catalysts that could drive the market higher,” Mr. Tantiangco added.

Mr. Tantiangco put the PSEi’s support at 7,150.

“If the local market gets past and holds ground above the 7,400-7,500 range, next resistance is seen at 7,700,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the market’s support is 7,050-7,260 and resistance is at 7,600-7,800.

For its part, 2TradeAsia.com placed the PSEi’s immediate support at 7,200 and resistance at 7,500-7,600.

“The final earnings season of the calendar year finally kicks off, with the banks opening with very good numbers, as expected of sectors with rate-sensitive top line drivers… Release of corporate guidance, both in earnings and capex (capital expenditures), heading into 2025 is also expected to stir up additional excitement in the short term,” it said. — R.M.D. Ochave