Investors turn attention to BSP’s campaign vs inflation

Investors will be placing bets ahead of the Monetary Board’s policy meeting on Thursday after recent positive inflation and gross domestic product (GDP) data fueled a six-day rally by the benchmark Philippine Stock Exchange index (PSEi).

The PSEi gained 2.88 percent the past week before ending at 6,161.89 on modest profit- taking.

“After last week’s strong rebound fueled by positive surprises in local inflation and GDP prints, investors will look to this week’s release of US October inflation data and the policy meeting of the [Bangko Sentral ng Pilipinas (BSP)] to determine the direction of stocks,” Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said in a note to investors.

Colet noted the PSEi could trade within the 6,050 to 6,250 range.

“If US consumer price pressures show clear signs of further easing and the BSP keeps its policy rate steady, then market participants could build a cautiously bullish case for equities,” he added.

In a separate note, Metropolitan Bank & Trust Co. (Metrobank) retained its full-year GDP forecast for the Philippines at 5.5 percent but with an “upward bias” as consumption was expected to pick up toward the end of the year.

PH economy expanded

Beating forecasts, the Philippine economy expanded by 5.9 percent in the third quarter as government spending, mostly in infrastructure, improved. The figure outpaced the 4.9 percent recorded in the last quarter.

“The above-consensus third quarter GDP print suggests that overall economic activity has remained resilient despite a high-interest rate environment, which gives the BSP room for a rate hike should inflation expectations be problematic this year,” Metrobank Research said.

“The BSP has telegraphed that it is ready to tighten further to dislodge high inflation expectations,” it added.

—Miguel R. Camus INQ