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PHILIPPINE STOCKS might persist in declining this week as negative sentiment stemming from corruption worries burdens local financial markets.
On Friday, the benchmark Philippine Stock Exchange index (PSEi) dropped 0.32% or 19.61 points to finish at 6,037.79, while the broader all shares index decreased by 0.23% or 8.57 points to 3,658.44.
Week over week, the PSEi also fell by 71.07 points from its closure of 6,108.86 on Oct. 3.
“The local market continues to show a bearish inclination as indicated by its trajectory and value turnover. The market remains in a downward trend as corruption matters and the peso’s depreciation persist in exerting pressure. Trading activity is still lackluster, suggesting diminished investor trust,” said Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco in a Viber message.
“The local market concluded the week lower as selling pressure endured despite a softer-than-anticipated inflation report for September and the Bangko Sentral ng Pilipinas’ (BSP) unexpected fourth consecutive 25 basis points (bps) rate reduction,” noted online brokerage 2TradeAsia.com in a market update.
On Thursday, the BSP unexpectedly reduced benchmark borrowing rates by 25 bps, thus lowering the target repurchase rate to 4.75%, the lowest since September 2022. Only six out of the 16 analysts surveyed by BusinessWorld had predicted this cut.
BSP Governor Eli M. Remolona, Jr. stated that they lowered rates to bolster growth, as the escalating corruption scandal surrounding state flood control and infrastructure initiatives has influenced business sentiment and economic outlook.
He mentioned that additional cuts may be feasible at their final meeting for the year set for Dec. 11, with more reductions potentially in consideration thereafter.
The unexpected action caused the peso to revisit the P58 mark on Thursday. On Friday, it concluded at P58.24 per dollar, dropping by half a centavo from its P58.235 close on Thursday.
For this week, Mr. Tantiangco indicated that the market might continue its downward trend, even as investors could leverage the PSEi’s recent decline to acquire undervalued shares.
“Negative sentiment is anticipated to persist, fueled by concerns regarding the Philippines’ corruption issues and their effects on our economic growth projections. Investors are also expected to keep an eye on the local currency’s performance against the US dollar. A further depreciation of the peso is likely to weigh on the local bourse,” he mentioned.
“Moreover, renewed global economic anxieties as the US enforces new tariffs on China are predicted to intensify market pessimism.”
He established the PSEi’s primary support at 6,000 and primary resistance at 6,150.
Meanwhile, 2TradeAsia.com set the PSEi’s immediate support at 6,000 and secondary support at 5,800, while resistance is established at 6,200. “Follow-through data from the US government shutdown could introduce additional volatility over the coming weeks, exacerbated by regional pressures amid recent steep fluctuations in currencies, in addition to the BSP’s latest rate decision.” — Alexandria Grace C. Magno
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