Philippine stocks are expected move sideways with an upward bias ahead of the release of March inflation data.
Analysts said investors were closely watching the March inflation as stable inflation rate would boost hopes of possible rate cut during the Bangko Sentral ng Pilipinas’ next policy meeting.
Manulife Investment Management Philippines remains cautiously optimistic about the local equities market due to lack of strong positive catalysts.
“With the PSEi trading at a P/E ratio of around 9.5x, we remain selectively cautious on stocks until more positive catalysts emerge, possibly in the second half of 2025, said Manulife head of equities Mark Canizares.
Among the key developments to watch include a recovery in domestic demand and peso stability relative to the U.S. dollar.
“Additionally, we are watchful of crucial developments, such as mid-term elections and how new set of lawmakers will support the current administration’s growth agenda. We expect continued emphasis on inclusive long-term growth and positioning the country as a prime investment destination in ASEAN, with priority sectors likely including mining, infrastructure, and manufacturing,” he said.
Canizares said that given the current market condition, investors should position on defensive stocks such as banks, utilities, and telcos at least for the first half of the year due to uncertainty on the path of interest rates and the upcoming midterm elections.
He said for the second half of the year, there could be a shift towards beneficiaries of lower rates, lower inflation and higher incomes such as consumer staples and consumer discretionary names.
The Philippine Stock Exchange index declined 1.9 percent last week to close at 6,147.44 on choppy trading.
Average daily value traded declined to P4.4 billion from previous week’s average of P7.78 billion.
Foreign investors were net sellers with outflows reaching P1.9 billion, a turnaround from inflows of P1.46 billion in the previous week.