Share prices are expected to move sideways this week, with investors adopting a wait-and-see mode on expectations the Bangko Sentral ng Pilipinas may again raise interest rates to tame the inflation rate.
Investors are already expecting the central bank to increase the interest rates in its meeting next month after the inflation rate in July will likely hit 5.1 percent based on the assessment of Bangko Sentral economists.
“The market is anticipating for more rate adjustments from the local central bank as domestic inflation continues to rise,” BDO Unibank Inc. chief investment strategist Jonathan Ravelas said. The central bank’s next policy meeting is on August 9.
Investors will also be monitoring President Rodrigo Duterte’s third State of the Nation Address today to get policy directions on important economic issues.
Online brokerage firm 2TradeAsia.com said equity investors would give extra attention to the sequel of the tax reform plan, which included corporate taxes and retention or removal of fiscal incentives.
“This will be crucial to listed companies’ capex rollout, including timing of budget preparations for large-ticket infrastructure projects. As such any hint to affirm this year’s growth prospects could invigorate appetite for equities, especially if these would lead to increased direct investments and job creation,” 2TradeAsia.com said.
Several groups have called for the suspension of the government’s Tax Reform for Acceleration and Inclusion Law due to a significant spike in fuel and food prices.
The Philippine Stock Exchange Index last week closed flat at 7,300.61 on mixed trading due to lack of catalysts.
Foreign investors were net sellers by P1.58 billion, while the average daily value dropped drop to P3.8 billion from P4.9 billon in the previous week on continued outflow of foreign funds.
Weekly top price gainers include Melco Resorts and Entertainment (Philippines) Corp., which advanced 8.5 percent to P6; Max’s Group Inc., which climbed 5.6 percent to P11.72; and Universal Robina Corp., which advanced rose 5.1 percent to P132.50.
Weekly top price losers include ABS-CBN Corp., which declined 9.8 percent to P22; Megawide Construction Corp., which fell 7.1 percent to P18; and Wilcon Depot Inc., which dipped 6.6 percent to 11.20.
Wall Street stocks, meanwhile, finished slightly lower Friday as President Donald Trump’s latest tariff threats and attack on the Federal Reserve kept a lid on gains despite largely solid earnings.
The Dow Jones Industrial Average finished down less than 0.1 percent at 25,058.06.
The broad-based S&P 500 dropped 0.1 percent to close the week at 2,801.83, while the tech-rich Nasdaq Composite Index also fell 0.1 percent to 7,820.20.
With the majority of larger earnings reports still to come, companies are on track to report second-quarter earnings about 20 percent above those of the year-ago period, according to a note from Credit Suisse.
“Overall, the earnings season has been strong, topline revenue growth has been solid as well,” said Quincy Krosby, chief market strategist at Prudential Financial. With AFP