Philippine stocks could see “choppy” trading ahead of the Bangko Sentral ng Pilipinas’ next policy meeting on Thursday, May 18.
The benchmark Philippine Stock Exchange index shed 1.61 percent the past week to close at 6,578.15.
“With the first quarter earnings season practically over and the market largely expecting the Monetary Board to hold its key policy rate at 6.25 percent, there is not much in the way of news flows that can drive a sustainable rally this week,” Juan Paolo Colet, managing director at Sy-led investment bank China Bank Capital Corp., said in a note to investors over the weekend.
“The index will probably attempt to recover the 6,600 level, and a failure to do so could lead to a retest of the 6,500 area where we expect bargain hunting to emerge,” he added.
Last week, the Philippine Statistics Authority said the economy expanded by 6.4 percent in the first quarter of 2023. This came at a slower pace versus the previous quarters but better than the 6.2 percent median forecast of private sector economists.
Bank of the Philippine Islands (BPI) said it adjusted its full-year gross domestic product forecast to 6.3 percent.
“So far pent-up demand has been able to offset the impact of inflation. With inflation slowing down, the economy may be able to sustain its growth above 6 percent. Weaker pressure on the margins of businesses may give them the opportunity to focus more on capital spending. Consumers may be able to spend more on discretionary items,” BPI said.
“However, a downside risk for growth this year is the elevated level of interest rates. Monetary policy works with a lag, and the full impact of the rate hikes will only be felt in the latter part of the year,” it added.