Stocks may rebound ahead of BSP policy meeting

PHILIPPINE shares may rebound this week ahead of the central bank’s policy meeting this week as coronavirus cases stay low and the government boosts its vaccination drive.

The 30-member Philippine Stock Exchange index (PSEi) declined by 42.75 points or 0.59% to close at 7,192.17 on Friday, while the broader all shares index fell by 12.12 points or 0.31% to 3,830.43.

Still, week on week, the local bourse jumped 136.98 points from its 7,055.19 close on Dec. 3.

“The low daily COVID-19 (coronavirus disease 2019) numbers and the aggressive vaccination campaign will likely keep the index above the key 7,000 level,” Papa Securities Corp. Equities Strategist Manny P. Cruz said in a Viber message.

The Philippines recorded 356 new COVID-19 infections on Saturday, bringing active cases to 11,373, the Department of Health (DoH) reported.

Some 40.69 million Filipinos or 36.9% are already fully vaccinated, DoH data showed.

The government wants to inoculate 70% of the population by yearend.

“The market may look forward to the upcoming interest rate decision in the country, scheduled for release in the coming days,” Timson Securities, Inc. Trader Darren Blaine T. Pangan said in a Viber message.

The Bangko Sentral ng Pilipinas (BSP) is widely expected to keep benchmark interest rates at record lows to support economic growth amid the threat of the Omicron variant.

All 15 analysts in a BusinessWorld poll held last week expect the Monetary Board to keep borrowing costs steady at its last policy review for the year on Thursday, Dec. 16.

The BSP has not touched its policy settings since November 2020.

The possibility of a faster tapering by the US Federal Reserve could also affect sentiment, analysts said.

“Recently, Federal Reserve Chair Jerome Powell’s disclosed of no longer using the term ‘transitory’ to describe inflation and this is likely an indication that they will raise rates not before long and may have knock-on effect on the global equities,” Papa Securities’ Mr. Cruz said.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said the market will continue to be volatile due to rising inflation in most countries and the issues faced by some Chinese developers.

Fitch Ratings downgraded property developers China Evergrande Group and Kaisa Group on Thursday, saying they had defaulted on offshore bonds, while a source said Kaisa had started work on restructuring its $12-billion offshore debt, Reuters reported.

Mr. Pangan said the PSEi could range from 6,920 to 7,265 this week.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the PSEi’s immediate major resistance or gap area for this week will be at the 7,2307,260 levels, while immediate support will be at 7,000-7,040 levels. —