THE stock market could go either way during the first, albeit shortened, trading week of 2025 depending on how investors are viewing the year ahead, analysts said.
The benchmark Philippine Stock Exchange index (PSEi) managed a 1.2-percent year-on-year gain despite dipping on Dec. 27, the last trading day of 2024, ending at 6,528.79 or up 78.75 points from the prior year’s 6,450.04.
Philippine financial markets, which were closed from Dec. 30 to January due to holidays, reopen today.
Philippine Stock Exchange building at the Bonifacio Global City in Taguig. PHOTO BY J. GERARD SEGUIA
Rizal Commercial Banking Corp. chief economist Michael Ricafort said that gains made as last year ended were due to signals from Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. that another rate cut could be ordered during the first policy meeting for 2025.
“Monetary policy is still somewhat restrictive … amid worry that inflation might rise again,” he added, thus investors would be “comfortable with baby steps on easing/rate cuts.”
Online brokerage firm 2TradeAsia.com, meanwhile, said that challenges could “keep broad-based rallies to a minimum” this year.
It noted downside risks including the inflationary impact from policies to be implemented by US President-elect Donald Trump, a weaker China, a stronger dollar greenback, and generally more hawkish central banks.
“In fact, consensus expectations for rate cuts have further softened in the past weeks prior to the holiday break, with still-rising long-term yields,” it noted.
Investors were advised to brace for a slowdown as “pessimism continues to be baked in security prices and potential local decision-makers may opt to stay sidelined until [the] politico-economic scene clears up post the crucial midterm elections in May…”
“As a consequence of medium-term headwinds, bottoms-up will potentially be just as practicable, if not better, than top-down investment approaches,” 2TradeAsia added.
Stock-specific stories should be a priority instead of riding market cycles, the online brokerage continued.
“Value plays in key industries (property, banking, among others) are still underscored, but there might be windows for short-run trading gains by ‘beating the beta’ once volatility returns next month,” it said.
Events to watch out for include the US Federal Reserve’s Jan. 28-29 policy meeting and the release of preliminary 2024 Philippine economic growth data on Jan. 30.
Unicapital Group research head Wendy Estacio-Cruz, meanwhile, said investors were “anticipating the release of the December inflation rate on Jan. 6, which is expected to play a pivotal role in market direction at the start of 2025.”
“For the opening week of 2025, the PSEi is projected to trade within the 6,400 to 6,700 range.”
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