PHILIPPINE STOCKS may continue to drop this week as bearish sentiment due to corruption concerns weighs on domestic financial markets.
On Friday, the benchmark Philippine Stock Exchange index (PSEi) fell 0.32% or 19.61 points to close at 6,037.79, while the broader all shares index dropped 0.23% or 8.57 points to 3,658.44.
Week on week, the PSEi also decreased by 71.07 points from its 6,108.86 close on Oct. 3.
“The local market remains bearishly biased as seen in its direction and value turnover. The market is still on a downtrend as corruption issues and the peso’s weakening continue to weigh. Trading remains tepid, implying weak investor confidence,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.
“The local market ended the week lower as selling pressure persisted despite a softer-than-expected September inflation print and the Bangko Sentral ng Pilipinas’ (BSP) surprise fourth consecutive 25 basis points (bps) rate cut,” online brokerage 2TradeAsia.com said in a market note.
On Thursday, the BSP unexpectedly cut benchmark borrowing costs by 25 bps to bring the target repurchase rate to 4.75%, the lowest since September 2022. Only six of the 16 analysts polled by BusinessWorld expected the reduction.
BSP Governor Eli M. Remolona, Jr. said they cut rates to support growth as the widening corruption scandal involving state flood control and infrastructure projects has affected business sentiment and the outlook for the economy.
He said another reduction is possible at their last meeting for the year scheduled for Dec. 11, with more cuts beyond that also on the table.
The surprise move caused the peso to return to the P58 level anew on Thursday. On Friday, it closed at P58.24 per dollar, slipping by half a centavo from its P58.235 finish on Thursday.
For this week, Mr. Tantiangco said the market may continue to move lower, even as investors could take advantage of the PSEi’s recent slump to buy cheap shares.
“Bearish sentiment is expected to linger fueled by concerns over the Philippines’ corruption issues and their impact on our economic growth outlook. Investors are also expected to monitor the movement of the local currency against the US dollar. A further depreciation for the peso is expected to drag the local bourse,” he said.
“In addition, revived global economic worries as the US imposes new tariffs against China are expected to aggravate market pessimism.”
He put the PSEi’s major support at 6,000 and major resistance at 6,150.
Meanwhile, 2TradeAsia.com placed the PSEi’s immediate support at 6,000 and secondary support at 5,800, while resistance is pegged at 6,200. “Follow-through data points from the US government shutdown could introduce added volatility over the next few weeks, exacerbated by regional pressures amid recent sharp gradients in currencies, on top of the BSP’s most recent rate move.” — Alexandria Grace C. Magno
