PSEi extends gains on softer inflation

MANILA, Philippines — Philippine stocks extended gains on Friday as investors welcomed a slight easing in inflation, though thin trading and lingering interest-rate concerns kept sentiment cautious.

The benchmark Philippine Stock Exchange Index (PSEi) gained 0.35 percent, or 21.18 points, to close at 6,090.60.

READ: Inflation eases to 6.1% in August

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said Friday’s advance marked the PSEi’s second straight session in positive territory and its third gain in four trading days.

The index also climbed to among its highest levels in more than a week, or since Aug. 26, after recently falling to two-month lows.

Headline inflation eased to 6.1 percent in August from 6.2 percent in the previous month, encouraging some buying activity, according to Luis Limlingan, head of sales at Regina Capital Development Corp.

Still, Limlingan said investors remained cautious as they assessed the Bangko Sentral ng Pilipinas’ (BSP) policy direction amid continued weakness in the peso.

Ron Acoba, chief investment strategist at Trading Edge, said selective bargain hunting among index heavyweights helped lift the market, while mining stocks led the broader rebound.

But the softer inflation print generated little enthusiasm because the rate remained well above the BSP’s 2-percent to 4-percent target range, Acoba said.

This kept the risk of further monetary tightening elevated.

Trading activity also remained subdued, with net value turnover reaching just P3.47 billion. This was well below the three-month daily average of P5.99 billion, according to Acoba.

Lackluster trading

“The easing of headline inflation to 6.1 percent from 6.2 percent generated little investor enthusiasm, as inflation remains well above the BSP’s 2 to 4 percent target range, keeping the risk of further monetary tightening elevated,” Acoba said.

Acoba added that persistently high global bond yields continued to weigh on sentiment. 

READ: BofA: BSP may end rate-hike cycle in Aug

Investors are also awaiting clearer signals on the US Federal Reserve’s policy path as market-implied odds of another rate hike have risen to nearly 60 percent.

The broader market showed positivity, with 108 stocks advancing, 93 declining, and 54 remaining unchanged. /pai