Sideways trading with upward bias likely

MANILA, Philippines — Share prices may move sideways this shortened trading week, with a slight upward bias, on hopes that the Bangko Sentral ng Pilipinas (BSP) will be less aggressive in raising interest rates.

The Philippine Stock Exchange index (PSEi) managed to close in the positive territory last Friday at 6,297.30, up by 0.11 percent week-on-week.

First Metro Investment Corp. head of research Cristina Ulang said BSP Governor Eli Remolona Jr. has started to sound dovish, which will inspire the market and spur stock buying on hopes of an economic revival in the second half and in 2027.

Remolona said last week said the BSP can afford to be less aggressive in raising interest rates as economic growth remains below potential.

2TradeAsia.com, for its part, said foreign exchange swings might be in store, pending global central banks’ move on benchmark interest rates.

The online arm of F. Yap Securities Inc. said the debate remains active whether BSP would adopt either a status quo or start adjusting interest rates higher at its next Monetary Board meeting on Aug. 27.

It said this might keep equity multiples capped, unless the US Federal Reserve moves with more conviction on its sequel policy direction.

“Investors should maintain a defensive and resist the urge to chase high-beta cyclicals global rate-cut headlines that may not translate cleanly into BSP action,” 2TradeAsia.com said.

It said portfolio weightings should stay anchored in well-capitalized banks with strong deposit franchises and high-yield utilities or conglomerates offering dividend visibility that rival bond yields.

“Use metal-driven rallies in local resource counters for quick gains, and keep dry powder ready for clarity once the Aug. 27 decision lands,” it said.

There will be no trading on Friday, Aug. 21, in observance of Ninoy Aquino Day.