Local stock market is poised to trade on expectations surrounding the Bangko Sentral ng Pilipinas’ (BSP) upcoming policy meeting, with investors looking for a pivot toward monetary easing. 

The Monetary Board’s decision and subsequent guidance will be crucial in determining whether the central bank will move to lower interest rates to bolster economic growth despite lingering concerns over the pace of inflation.

A move by the BSP to reduce the policy rate could provide the much-needed catalyst for domestic equities, according to Japhet Tantiangco, research manager at Philstocks Financial. Markets are also closely monitoring the peso, as any further appreciation of the local currency is expected to improve investor sentiment and lower the cost of imports.

Beyond monetary policy, the market’s trajectory will be shaped by the final wave of corporate earnings. Investors are parsing fourth-quarter and full-year 2025 financial reports for signs of fundamental resilience, while also awaiting the latest data on overseas Filipino workers' cash remittances, a key pillar of domestic consumption.

While the Philippine Stock Exchange index (PSEi) faced selling pressure and profit-taking last week, Tantiangco said valuations remain compelling for long-term buyers. The market is currently trading at a price-to-earnings ratio of 10.7 times, a significant discount compared with its historical average of 14.4 times and the broader regional average of 19.2 times.

The domestic outlook is unfolding against a backdrop of diverging global central bank strategies. Recent United States (US) employment data has tempered expectations for a Federal Reserve rate cut as early as March, shifting the spotlight back to the BSP’s Feb. 19 meeting. Market consensus is currently split between a 25-basis-point reduction and a pause, according to online brokerage 2TradeAsia.com.

Policy makers must balance the narrowing spread against US yields while managing the trade-off between sticky inflation and a softening 2025 gross domestic product outlook. 

As the benchmark index consolidates, 2TradeAsia.com suggested a tactical shift toward sector-selective plays. Mining stocks have emerged as a preferred hedge, supported by precious metals approaching record highs and a floor in nickel prices following Indonesian supply cuts.

In individual equities, Abacus Securities Corp. recommended buying SM Investments Corp. on recent weakness. The conglomerate has underperformed the index by 21 percentage points over the last seven months, driving its forward price-to-earnings ratio to 9.0 times—roughly 8% cheaper than the PSEi. Historically, SM has traded at such a discount to the index less than 2% of the time since 2010.

Selectivity remains the dominant theme for analysts. Unicapital Securities has a buy rating on Century Pacific Food Inc., citing declining tuna costs and expansion in the dairy segment.

 With inflation stabilizing between one percent and two percent, consumer volume growth is expected to accelerate through 2026. Separately, Unicapital maintains a buy on Apex Mining Co., anticipating higher output from its Amacan project to capitalize on resilient global gold prices.