Filipino shares can rise this week if the Bangko Sentral NG Pilipinas (BSP) is expected to lower the interest rates for a fourth consecutive meeting.
On Friday, the Benchmark Philippine Stock Exchange Index (PSEI) fell by 1.39% or 86.98 points to close to 6,154.99, while the wider All -Index decreased by 0.63% or 23.41 points to 3,663 , 64.
Week in week, however, the PSEI rose by 5% or 292.4 points of its 5,862.59 closure on January 31.
“The PSEI managed to bounce back to the 6,000 zone in the week after a reconstitution of the main index,” said Online Brokerage 2tradeasia.com in a market memorandum.
Changes to the 30-person PSEI came in force on 3 February. The market operator added Areit, Inc. and China Banking Corp. To replace Nickel Asia Corp. and Wilcon Depot, Inc. after the index review 2024.
Bargain hunt after the deterioration of the market to wear market area on January 31, also stimulated the PSEI last week.
For this week, the focus of the market will be at the first policy meeting of the BSP of the year on 13 February (Thursday), said Philstocks Financial, Inc. Senior research analyst Jaaphet Louis O. Tantiangco in a Viber message.
“A reduction in the policy rates together with a Dovish forecast is expected to give the market a boost,” said Mr. Tantiangco.
Recent DOVISH signals from BSP Governor Eli M. Remolona, Jr. have already fueled the expectations of a new rate reduction in this week’s policy evaluation, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in an e-mail.
A Business world Poll showed that 19 out of 20 analysts expect that the Monetary Council will lower the bench market rates with 25 basic points (BP) this week, which would yield the policy percentage to 5.5% of the current 5.75%.
Mr Remolona said earlier that a rate reduction “is on the table” at the meeting of the Monetary Board of Directors of 13 February.
He said that this year they can lower the interest rates with a cumulative 50 BPs as “policy insurance” against risks, whereby the reductions will probably be done in the first and second half in steps of 25 BP.
The BSP has lowered the loan costs with 75 BPS since he deposited the relaxation cycle in August last year, which means that the policy percentage is brought to 5.75%.
Mr. Tantiangco added that the recent rebound of the PESO could also help stimulate the local stock market.
“Last week we saw a rating from the peso against the dollar, as well as a decrease in our long-term treasury yields. A continuation of this is expected to help the local market to continue, “he said.
On Friday, the peso closed at a highest point of more than a month of P58.03 per dollar. Week in week it climbed 33.5 centavos of its P58,365 closure on January 31.
Mr. Tantiangco set the support of the PSEI at 6,150 and resistance at 6,400, while Mr. Ricafort supported 6,000 and resistance at 6,275-6,530.
For his part, 2tradeasia.com has the immediate support of the market at 6,000 and resistance at 6,300-6,400. – RMD Ochave