Philippine stocks will look to overseas markets for fresh leads this week now that the policy-setting meeting of the Bangko Sentral ng Pilipinas (BSP), which had grabbed most of the market’s attention over the past several days, is over and no key rate hike was announced.
The BSP’s Monetary Board last week decided to keep its key rates unchanged but raised the special deposit account (SDA) rates amid rising inflation.
Lexter Azurin, research analyst at Unicapital Securities Inc., said in a phone interview that the local market will closely monitor the US market for leads this week.
For his part, Jonathan Ravelas, chief market strategist at BDO Unibank Inc., expects range trading to characterize the performance of the local market this week, with the benchmark index expected to move within a range of 6,600-6,800 points.
“We will continue to observe inflation developments and see if the BSP will hike [rates]in July,” Ravelas added.
After staying in negative territory for the most part of last week, local stocks bounced back on Friday following the Monetary Board’s announcement on Thursday that it was keeping its key policy rates unchanged.
“The BSP kept policy rates steady with the overnight borrowing and lending rates at 3.5 percent and 5.5 percent, respectively, but it tweaked the SDA rates higher by 25 basis points to 2.25 percent,” noted Justino Calaycay, analyst at Accord Capital Equities Corp.
In a statement, the BSP maintained that the future inflation path “is likely to stay within target over the policy horizon” but it also recognizes that the balance of risks to the inflation outlook “remains tilted toward the upside.”
The central bank’s decision cheered investors and inspired a market rebound on Friday. The Philippine Stock Exchange index (PSEi) ended in the green for the first time in six days, gaining 31.57 points or 0.47 percent to 6,730.96, while the wider all shares added 13.37 points or 0.33 percent to 4,042.01.