PSEi susceptible to falling below 6,000, says analyst
Philippine stocks could remain under pressure, with the next major support zone of 6,000 now in view, after the benchmark index sank deeper last week. The Philippine Stock Exchange index (PSEi) tumbled 2.06 percent last week to end the Friday session at 6,160.61, its lowest level so far in 2023.
The PSEi was at risk of revisiting the 6,000 to 5,700 levels in the short term before bargain hunters step in, Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said.
Investors would also be taking note of US Federal Reserve chair Jerome Powell’s hawkish tone during his anticipated speech at the Jackson Hole symposium over the weekend.
Powell said they were prepared to raise interest rates further to control inflation, which he described as “too high.” Major US indices started the session weak but rallied toward the market’s close as investors cheered Powell’s comments that US consumer spending was “especially robust.”
Meanwhile, HSBC expects the Bangko Sentral ng Pilipinas (BSP) to cut the reserve requirement ratio (RRR) by 100 basis points to 8.5 percent by the fourth quarter of 2023.
The ratio refers to the amount of deposits commercial banks must hold as reserves. A lower ratio means banks can deploy more cash for more productive uses such as consumer and business loans.
“We estimate the cut to inject P127 billion of liquidity in the system, of which the BSP will likely neutralize using its constantly improving array of monetary tools; this is to ensure that the central bank’s monetary stance does not change even with a cut in the RRR,” HSBC said.
“Market participants may read the second RRR reduction in late 2023 as a signal that the central bank’s bias has shifted toward providing incremental support to the economy. All else equal, this is positive for bonds,” it added.
