Erratic equities trading expected following rate hike signal
After booking some gains, the Philippine Stock Exchange index (PSEi) could face a tough trading week after the Bangko Sentral ng Pilipinas (BSP) alerted a potential rate hike in November that analysts say could sour investor sentiment.
“Both the Federal Reserve and [the BSP] have left the door open for a rate hike in November and, more importantly, they have signaled a potentially long period of high rates next year,” China Bank Capital Corp. managing director Juan Paolo Colet said.
Last week, the BSP kept the monetary policy rate at 6.25 percent but said a rate hike was possible in the short term due to rising consumer prices.
Inflation is now projected to average at 5.8 percent this year, up from the previous forecast of 5.6 percent, due to higher transport fares and electricity rates.
“Local market action will revolve mainly around changes to the PSE benchmark index that take effect on Tuesday as well as quarter-end window dressing,” Colet added.
The 30-member PSEi will welcome Bloomberry Resorts Corp. and Century Pacific Food Inc. on Sept. 26.
Aboitiz Power Corp. and Metro Pacific Investments Corp. will exit the benchmark after downsizing their public float to below the requirement.
Colet sees PSEi trading between the 6,000 and 6,200 territory this week.
On Friday, the benchmark PSEi climbed by 0.79 percent, or 48.08 points, to close at 6,142.79 while the wider All-Shares index rose by 0.69 percent, or 22.88 points, to settle at 3,316.95.
