Bargain hunting likely before BSP policy review

BARGAIN HUNTING may prop up Philippine shares this week after the index ended at a seven-month low on Friday, and as the market awaits the Bangko Sentral ng Pilipinas’ (BSP) policy meeting.

On Friday, the bellwether Philippine Stock Exchange index (PSEi) closed lower for an eighth consecutive session, going down by 2.93% or 186.08 points to end at 6,158.48. The broader all shares index also retreated by 1.89% or 65.11 points to 3,375.20.

The PSEi’s finish was its worst for the year thus far and was the lowest in over seven months or since its 6,110.88 close on Nov. 14, 2023.

Week on week, the index dropped by 3.5% or 225.22 points from its 6,383.70 finish on June 14.

“Market-on-close selling drove the local bellwether back towards the 6,100 level ahead of the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board meeting [this] week,” online brokerage 2TradeAsia.com said in a note.

“The local market is seen to be exhibiting a bearish bias, running an eight-day losing streak,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

For this week, the main driver for Philippine stocks would the BSP’s policy review on Thursday, June 27, Mr. Tantiangco said.

“With its recent downturn, the market has been driven to more attractive levels. Thus, we may see some episodes of bargain hunting in this week’s trading. However, we do not expect the market to stage a strong rally yet until investors hear positive narratives on the timing of the Bangko Sentral ng Pilipinas’ policy easing,” he said.

“Investors will be watching out for cues on the BSP’s monetary policy outlook. Hints of rate cuts soon may cause a turnaround in the market’s current direction. If there would be none, however, the market may continue with its bearish bias,” Mr. Tantiangco added.

Investors will also monitor the peso’s movement against the dollar, he said.

The local unit weakened to a near 20-month low on Friday, ending at P58.80 per dollar, inching down by two centavos from its P58.78 finish on Thursday, Bankers Association of the Philippines data showed. This was the peso’s worst finish since its P58.87-a-dollar close on Oct. 24, 2022.

Mr. Tantiangco put the PSEi’s immediate support at 6,150 and resistance at 6,400.

For his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort put the PSEi’s next important support at 6,000 and major resistance at  6,350-6,390.

He said the BSP is expected to match the US Federal Reserve’s latest rate pause at their meeting this week “to maintain healthy interest rate differentials and to help stabilize the peso exchange rate, import prices, and overall inflation.”

Another lead for the market is the possible release of the latest Philippine budget balance data this week, Mr. Ricafort added.

2TradeAsia.com placed the PSEi’s immediate support at 6,000, primary resistance at 6,300, and secondary resistance at 6,500. — R.M.D. Ochave