Philippine markets enter September with little room for complacency, as investors weigh the appeal of battered stock valuations against inflation, oil and currency risks that could keep sentiment fragile.
The Philippine Stock Exchange index’s 4.52 percent slide to 5,956.33 last week pushed the benchmark below the psychologically important 6,000 level, leaving investors to decide whether cheap valuations represent opportunity or simply reflect a market still searching for firmer footing.
F. Yap Securities’ 2TradeAsia leans toward the former, albeit cautiously. With several shares trading near historic lows, the brokerage expects gradual positioning rather than an aggressive rush back into equities.
Defensive names and selective metals and commodities plays could offer relative shelter while investors watch inflation and foreign exchange developments.
The Bangko Sentral ng Pilipinas’ latest 25-basis-point rate increase to 5 percent has also reinforced the market’s defensive mood.
2TradeAsia sees the move as largely preemptive, aimed at containing risks from El Niño-related food disruptions, volatile oil prices and possible wage increases later this year. Its base case is for rates to remain at current levels through year-end.
The peso offers another reminder that the macro picture remains unsettled. The currency weakened for a third consecutive week and lost 1.7 percent in August, pressured by a wider USD5.97-billion July trade deficit, rising oil import costs and seasonal third-quarter demand for imports.
For stocks, a rebound toward 6,150 to 6,200 may invite profit-taking rather than unqualified optimism.
August inflation will be the immediate test. A reading above 6 percent could keep monetary policy tight, leaving September markets cautious even as bargain hunters begin looking harder for value.
