While conditions are rosy at the domestic front, cautious trading is expected at the local stock market as investors would not want to leave their bets during the Lenten break, wary that global markets remain restive and another tweak in US tariff policy can sent global markets into another tailspin.
“The local market is already on a five-week losing streak as global trade war fears take over sentiment. On a positive note, the market is still able to keep its position above the 6,000 level,” said Philstocks Financial Research Manager Japhet Tantiangco.
He noted that, “At its current position, the market is deemed to be at attractive levels. Hence, we may see episodes of bargain hunting. Hopes of further easing by the Bangko Sentral ng Pilipinas moving forward may also compel investors to take positions next week.
“However, worries over the global economy amid the US’ protectionist policies and the possibility of retaliation by other countries may continue to weigh on sentiment.”
2TradeAsia.com said “Our view remains that the Philippines is shielded by a consumption-led economy and low export dependence, which means direct exposure is limited.,
“However, potential risk-off sentiment likely being extended (potential multi-year spill-over, now a war of attrition) means additional currency realignment pressures, risk-off flows, and supply chain shifts that may have more structural impacts to valuations down the line.”
Meanwhile, Tantiangco said “Investors are also expected to maintain a cautious stance especially by the end of the shortened trading week as they take into consideration the uncertainties on the days the market is closed.”
2TradeAsia.com said investors will also be looking out for the overseas Filipinos remittance numbers for February 2025 to be released by the BSP on Tuesday to get cues on the health of the local economy.
Underscoring relative stability at home, the brokerage said the BSP cut policy rates by 25 basis points, in a move that was expected given the recent inflation trend but unique relative to the rest of the world.
“The benchmark rate now sits at 5.5 percent, with messaging for further rate cuts for the rest of the year. Inflation outlook was predictably downgraded to 2.3 percent for 2025 (from 3.5 percent), and 3.3 percent for 2026 (from 3.7 percent), as stars continue to align, particularly in rice imports and global fuel and energy.
“The easing is viewed as the BSP taking advantage of its policy space ahead of a more challenging mid-year in terms of external risks, as weaker demand and non-PH inflation are expected to pressure risk-off gradients globally.
“We underscore that this move should be incrementally constructive to local equities in the medium-term... especially in sectors sensitive to funding costs and domestic demand,” it added.
Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort noted that monetary authorities have signalled possible total local rate cuts of 0.50 percent or 0.75 percent for 2025.
Meanwhile, global crude oil prices recently declined to new four-year lows and a stronger peso exchange rate that is among the best in six months could both help further ease import prices and overall inflationary pressures, support more benign inflation, and help justify possible monetary easing or rate cuts, moving forward.
“Another positive factor recently: The recent cut in banks’ reserve requirement ratio (RRR) that could infuse about ₱330 billion into the banking system effective March 28, 2025 or more than a week ago, Ricafort said.