As United States (US) President Donald Trump’s tariffs will continue to weigh down global equities markets this week, the Philippine Stock Exchange will not be an exception, although traders are hoping that low valuations and a possible rate cut by the Bangko Sentral ng Pilipinas (BSP) will spur some bargain-hunting.
“With already four straight weeks of decline, the market is drawn to more attractive levels from a fundamental standpoint. Hence, we may see bargain-hunting in [this] week’s trading,” said Philstocks Financial Research Manager Japhet Tantiangco.
He added that, “Expectations that the BSP will cut policy rates in their upcoming meeting following the further decline in inflation last March may give sentiment a boost.” The BSP’s Monetary Board will decide on key interest rates on Thursday, April 10.
However, Tantiangco warned that “global economic concerns amid the US’ tariff policies are still expected to weigh on the market, tempering the potential rise [this] week. Shocks in the form of new tariff announcements from the US pose downside risks that may pull the market lower.”
With Trump’s tariffs hitting emerging economies in Asia the hardest, 2TradeAsia.com said, “The reaction to risk assets and currencies in Asia has been felt, and more institutions are expected to downgrade growth projections for the region with trade output being heavily impaired.”
“The Philippines’ relatively low tariff rate and consumption-driven output and monetary policy will continue to insulate against the worst of the shock, but the extent to which these tariffs and restrictive trade policies become structural (‘for how long’ and ‘for how deep’) will play a crucial role in shaping foreign capital flows in the region for the rest of the year,” it added.
While March’s inflation rate of 1.8 percent was lower than expected, 2TradeAsia.com said its impact on monetary policy remains a “significant wildcard” within the context of eroding growth outlook globally.
“The BSP may be encouraged to be ahead of the rate cut curve as it has more counter space to work with versus regional peers... While a second-quarter rate cut has been alluded to earlier, markets must acknowledge the presence of external risks as significant limiting factors, at least in the short term,” the brokerage said.
For stock picks, Unicapital Securities’ Peter Louise Garnace recommends Converge ICT Solutions Inc. (CNVRG) due to its promising outlook, as it expands its market share in underserved and untapped areas.
“We see CNVRG to sustain its growth momentum on the back of strong demand for broadband… Furthermore, we believe CNVRG’s revenues will be boosted by its recent partnership with Starlink to enhance connectivity in remote areas nationwide,” he noted.
For its part, Abacus Securities Corp. rates Citicore Renewable Energy Corp. a long-term BUY due to its aggressive plans to expand capacity annually at a rate that is faster than that of its local peers.