PHILIPPINE SHARES may continue to climb this week after the Bangko Sentral ng Pilipinas (BSP) on Thursday cut benchmark interest rates for the first time in nearly four years.
On Friday, the Philippine Stock Exchange index (PSEi) rose by 2.3% or 154.46 points to end at 6,847.37, while the broader all shares index went up by 1.74% or 63.27 points to finish at 3,691.42.
Week on week, the PSEi climbed by 3% or 199.57 points from its 6,647.80 close on Aug. 9, marking its second consecutive weekly gain.
“Local equities surged, boosted by the Bangko Sentral ng Pilipinas’ 25-basis-point (bp) rate cut, the first in almost four years,” online brokerage firm 2TradeAsia.com said in a market note.
“The local market had a good run last week, with value turnover going above the year-to-date average. In the process, the market was able to get past its 6,700-6,800 resistance range,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
The Monetary Board on Thursday reduced its target reverse repurchase rate by 25 bps to 6.25%.
This was the first time the BSP reduced rates since November 2020, when it delivered a 25-bp cut amid the coronavirus pandemic.
Prior to the cut, the BSP kept its policy rate at an over 17-year high of 6.5% for six straight meetings following cumulative hikes worth 450 bps between May 2022 and October 2023 to combat inflation.
“With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance,” BSP Governor Eli M. Remolona, Jr. said at a briefing.
Mr. Remolona said they could cut rates by another 25 bps this year. The Monetary Board’s remaining policy-setting meetings are scheduled for Oct. 17 and Dec. 19.
For this week, the market will continue to react to the BSP’s rate decision, Mr. Tantiangco said.
“With the BSP already going for one 25-bp rate cut, together with the prospect of more monetary policy easing moving forward, we may see the market climb further this week,” he said. “Easing recession worries in the United States are also expected to help the local bourse.”
Mr. Tantiangco said if the PSEi can remain at the 6,700-6,800 range, this would be its new support, while its next resistance is at 7,000.
“There is clear upward bias to market movements as rate cuts, locally and abroad, have turned in favor of risk assets. The dying out of the ‘higher-for-longer’ view on global interest rates may be the impetus the PSEi needs to approach 7,000 in the medium term,” 2TradeAsia.com said.
The online brokerage placed the market’s immediate support at 6,600 and resistance at 7,000.
Philippine financial markets will be closed on Friday (Aug. 23) for a special nonworking holiday in observance of Ninoy Aquino Day, which was moved from the original Aug. 21 date. — R.M.D. Ochave
