Philippine equities are likely to remain volatile this week as accelerating inflation, peso weakness and mounting expectations of monetary tightening weigh on sentiment, tempering optimism over corporate earnings and potential new stock market listings.
Brokerage 2TradeAsia urged investors to maintain defensive positions ahead of the Bangko Sentral ng Pilipinas’ (BSP) October 22 policy meeting, favoring large-cap companies with pricing power and dollar-denominated earnings to help cushion macroeconomic risks.
September inflation accelerated to 7.2 percent, intensifying concerns that the central bank could raise interest rates by 25 basis points. A larger 50-basis-point increase has also emerged as a possibility, potentially increasing borrowing costs for businesses and consumers.
“October seems to force defensive positions,” 2TradeAsia said, adding that it would “rather be late to the recovery than early to the bottom.”
Despite the uncertainty, the Philippine Stock Exchange index (PSEi) rebounded 1.6 percent last week to close at 5,700, ending a five-session losing streak. Net foreign selling also narrowed to P1.30 billion from P4.57 billion in the previous week, suggesting some moderation in selling pressure.
RCBC chief economist Michael Ricafort placed immediate support for the benchmark index at 5,500 to 5,600, with resistance at 5,800 to 5,930.
Currency movements remain another concern. The peso faces further depreciation risks, with Ricafort identifying P63 against the US dollar as a potential resistance level following its previous record low. A weaker peso could raise import costs and add to inflationary pressures, complicating the outlook for monetary policy.
Investors will also track US inflation figures, oil prices and geopolitical developments for signals on global interest rates and international capital flows.
Locally, the anticipated P60-billion initial public offering of Mynt, the operator of GCash, could test demand for new listings amid unsettled market conditions. Third-quarter earnings may also reveal diverging performance, with banks potentially better positioned than consumer and property firms exposed to higher financing costs.
The market direction will hinge on incoming inflation data and signals from the BSP, with investors balancing selective opportunities against the risk of further volatility.
