PH traders move to knock down 6,700 on rate cut hopes

Investors will continue to cling to prospects of a rate cut, which have been fueling the local bourse’s performance in recent weeks despite tepid trading.

For the first time in nearly two months, the Philippine Stock Exchange Index (PSEi) closed above 6,600 on Friday at 6,648.23, up by 0.59 percent from the previous week.

Although this is already up by 1.43 percent from the start of the year, average market value turnover remained low at P4.96 billion. This is down by 18.55 percent from the full-year 2023 value of P6.09 billion.

For this week, the PSEi may test the 6,700 resistance, as the market anticipates a projected rate cut by the Bangko Sentral ng Pilipinas (BSP), according to Jeyniel Carl Manuel, equities trader at Seedbox Securities Inc.“The prolonged high interest rate environment of 6.5 percent has made corporations hesitant to borrow,” Manuel said in an email.

“A rate cut would encourage borrowing, enabling corporations to increase capex (capital expenditure) for further expansion, which would boost investor confidence,” he added.

Last week, BSP Governor Eli Remolona Jr. said the Monetary Board would “somewhat more likely” cut the policy rate by a total of 50 basis points (bps) this year, even moving ahead of the Fed with a possible 25-bp cut in August. —Meg J. Adonis INQ