By Revin Mikhael D. Ochave, Reporter
PHILIPPINE STOCKS could sustain their climb on dovish policy forecasts and a more positive outlook by businesses and consumers for the fourth quarter (Q4), analysts said.
“Bulls lined up at the local equity market, fueled by the Federal Reserve’s 50-basis-point (bp) rate cut last week and the Bangko Sentral ng Pilipinas (BSP) chief’s comments of potentially two more rate cuts this year,” online brokerage 2TradeAsia.com said in a market note.
On Friday, the main Philippine Stock Exchange Index (PSEi) dropped by 0.4% or 30.44 points to 7,428.30, while the broader all-share index shed 0.19% or 7.67 points to 3,970.43.
Week on week, the PSEi gained 2.43% or 175.98 points from the 7,252.32 close on Sept. 20 for a four-week rally.
Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message the market could improve on expected rate cuts.
“While we may see episodes of profit taking this week as the market is technically overbought based on its relative strength index, the general direction of the bourse is still projected to be upwards,” he said.
“Optimism towards the dovish monetary policy stance both here and abroad is expected to help in sustaining the market’s movement,” he added.
Investors may also digest the BSP’s latest confidence surveys, which showed that both consumers and businesses are optimistic for the next quarter and next twelve months, Mr. Tantiangco said.
On Friday, a BSP survey showed that the overall confidence index of consumers improved to 0.7% for the fourth quarter from -0.4%, signaling a more positive outlook due to expectations of higher wages and more sources of income.
A separate BSP poll also showed that the confidence index of companies rose to 56.8% for the last quarter of 2024 from 43.4%, led by the expected stronger demand during the holidays and slower inflation.
On Wednesday, BSP Governor Eli M. Remolona, Jr. hinted that the central bank could reduce interest rates by 50 bps more this year.
The central bank began its easing cycle In August after lowering the target reverse repurchase rate by 25 bps to 6.25%, the first time in nearly four years.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., in an e-mail said the market’s immediate support is 7,060 to 7,220, while the resistance is 7,552.2 to 7,800.
“The underlying momentum for 1.5 months already remains intact for as long as it remains above the immediate support at 6,810-6,935 levels,” he added.
2TradeAsia.com pegged the market’s immediate support at 7,100 and resistance at 7,500.
“The additional liquidity from the reserve requirement ratios plus policy rate cuts should help the PSEi’s ambition to get past 7,500,” it said. “There is historical selling pressure around the benchmark’s current trading range, but the yield curve steepening and disinverting should support more consistent inflows as the appeal for bills and short-term income securities evaporate relative to riskier assets.”
Mr. Tantiangco estimated the market’s support at 7,400 and resistance at 7,700.
“Investors are also expected to look towards the upcoming S&P Global Philippines Manufacturing Purchasing Managers’ Index and the September inflation data for further clues on the local economy,” he added.