No trading due to gov’t work suspension

The Philippine Stock Exchange (PSE) went on a trading holiday yesterday in line with the government’s directive to suspend office work due to a nationwide transport strike.

The PSE had to suspend stock trading as there was no clearing and settlement at the Securities Clearing Corporation of the Philippines due to the suspension of operations in the Philippine Payments and Settlements System (PhilPaSS).

Last week, the main-share Philippine Stock Exchange index (PSEi) gained 1.65 percent to close on Friday at 8,447.94, a new all-time high. The local stock barometer rallied for the second straight week.

In recent days, local stocks have been buoyed by the surge in investors’ liquidity arising from the tender offer of geothermal firm Energy Development Corp. alongside optimism ahead of the third-quarter local corporate earnings reporting season.

In recent weeks, the local stock barometer has moved in contrast to the weakening peso. For the third straight week last week, the peso weakened further by 0.47 percent to 51.39 against the dollar.

Based on the August overseas Filipino remittance report, ING senior economist Joey Cuyegkeng said the margin between remittances and the trade deficits had practically disappeared despite the upside surprise of remittances for the month with a year-on-year increase of 7.8 percent.

The increase in remittances also supports higher domestic spending, which, in turn, means firm imports ahead, the economist said. August saw only less than $100 million excess in remittances coming from a $670 million margin in July, he added.

“Since 2016, the margin has been erratic and would likely remain so in the coming months. This would keep the peso on the defensive bias,” Cuyegkeng said.

“A hawkish BSP (Bangko Sentral ng Pilipinas) would moderate the weakening bias. We still expect a BSP preemptive tightening this December especially if inflation continues to rise. The preemptive move would likely stabilize inflation expectations,” he said.

The BSP’s prospective monetary action supports ING’s yearend forecast of 51 to $1.