Still no big movement expected in PSEi

The benchmark Philippine Stock Exchange index (PSEi) is seen to consolidate as investors look forward to second quarter corporate earnings and inflation indicators ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting next month.

The PSEi shed 2.6 percent last week to end at 6,195.26. Selling pressure increased after the BSP announced an unscheduled interest rate hike of 75 basis points to stabilize the Philippine peso while tempering inflation expectations.

Since the start of the year, the PSEi had lost 13 percent, mainly due to volatile external market conditions.

“The situation in the financial markets would remain similar for as long as the Russia-Ukraine conflict drags on, in terms of relatively elevated global commodity prices and inflation,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in a note to investors over the weekend.

For now, the PSEi would be moving in a narrow range, with support pegged at 6,000 and immediate resistance seen between 6,300 and 6,500, Ricafort said.

Another possible increase

Meanwhile, Bank of the Philippine Islands (BPI) said the BSP could hike interest rates by another 25 basis points in its next policy meeting in August given that inflation “has probably not peaked yet.”

BPI also agreed with Finance Secretary Benjamin Diokno’s assessment the Philippines has the capacity to absorb the recent rate hike.

“[Gross domestic product] growth may slow down a bit because of higher interest rates, but it might be worse if inflation goes up further,” the lender said.

“A prolonged period of high inflation will eventually hurt consumers, which will likely affect the economy more severely compared to higher interest rates,” it added. INQ