Philippine stocks are expected to continue with their upward trek on expectations the Bangko Sentral ng Pilipiinas (BSP) will continue to reduce interest rates with inflation settling at 1.9 percent in September 2024.
COL Financial Inc. research head April Lee Tan said the October inflation rate is also expected to stay low on the lifting of India’s rice export ban.
“This should give BSP room to cut rates further,” Tan said.
BSP Governor Eli Remolona hinted of the possibility of quarter-point reduction in benchmark interest rate in the next Monetary Board meeting next week.
Inflation in September was the lowest level in 52 months. This is also a significant decline from 3.3 percent in August and 6.1 percent a year earlier.
Online brokerage firm 2TradeAsia.com said speculation is also high for possible 50-basis-point rate cut.
“Recall that consensus initially penciled two cuts [25 bps each] for October and December meetings. Expectations have shifted since the Fed cut big in September and central banks globally are in a cat-and-mouse game to get ahead of the curve,” 2TradeAsia.com said.
Given this possibility, analysts said many investors were positioning on stocks that would benefit from low-inflation and low-interest-rate environment.
These stocks include banks, property and consumer-related firms.
The Philippine Stock Exchange index last week rose 0.53 percent week-on-week to close at 7,467.92, while the wider all-shares index advanced by 1.79 percent to 4,041.65.
Average daily value weakened to P6.22 billion from the previous week’s average of P9.6 billion. Foreign buying remained strong, with net inflows amounting to P1.98 billion.
With AFP
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