ANTICIPATIONS of additional policy relaxation following slower economic expansion in the initial quarter and declining inflation are predicted to influence Philippine equities this week.
The sentiment in the stock market would also be influenced by the outcomes of the midterm elections scheduled for May 12, analysts noted.
“In spite of a GDP (gross domestic product) shortfall, the Philippine Stock Exchange Index (PSEi) nearly approached 6,500, supported by robust local earnings and investor confidence regarding a sooner-than-anticipated Fed rate reduction,” stated online brokerage firm 2TradeAsia.com in a market report.
On Friday, the benchmark PSEi advanced 1.07% or 68.71 points to 6,458.2, while the broader all-share index gained 0.6% or 22.5 points to 2,762.85. Week on week, the index increased by 0.72% or 46.34 points.
Markets will be closed on Monday as Filipinos elect a new cadre of congressmen, 12 of the 24-member Senate, and a multitude of local officials in midterm elections regarded as a referendum on President Ferdinand R. Marcos, Jr.’s three-year governance.
Investors will keep an eye on the outcomes of the May 12 elections, Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc., conveyed via a Viber message.
“Investors are anticipated to be vigilant regarding the results of the midterm elections locally, as these will provide insights into forthcoming policies,” he remarked.
Mr. Tantiangco noted that the market would be propelled by expectations of further local policy rate reductions given the deceleration in inflation during April and the weaker-than-expected economic growth in the last quarter.
“Expectations of assertive monetary policy relaxation by the Bangko Sentral ng Pilipinas for the remainder of the year following inflation and GDP statistics are still anticipated to underpin the local market,” he added.
Inflation decreased to 1.4% in April, down from 1.8% in March and 3.8% the previous year, as prices for food and transportation declined.
The inflation rate for last month was the slowest in over five years.
The Philippine economy grew by a weaker-than-anticipated 5.4% during the first quarter, a reduction from 5.9% a year earlier, amid uncertainty due to US President Donald J. Trump’s expansive reciprocal tariffs.
“Investors are also likely to keep an eye on progress regarding trade discussions with the US, with indications of advancement likely to be viewed positively by the market,” Mr. Tantiangco mentioned.
“If the market manages to maintain its position at 6,400, it will be deemed as its new support level while the subsequent resistance point will be at 6,600,” he added.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., established minor support for the PSEi at 6,255 to 6,360 and resistance at 6,490 to 6,516.85.
2TradeAsia.com suggested that support for the PSEi is at 6,200, with primary resistance at 6,500 and secondary resistance at 6,600.
“Despite subdued growth, earnings thus far, especially in consumer and banking sectors, have shown resilience, and with electoral momentum carrying into the second quarter, the overarching outlook remains promising for local risk assets,” it observed.
“Monitor trading volume as momentum may increase post-election once the political tumult dissipates and fiscal clarity enhances,” the brokerage noted. “While the PSEi seeks to achieve a breakthrough past 6,500, emphasize quality and second-half momentum.” — Revin Mikhael D. Ochave