Stocks face inflation test as BSP pivot bets rise
Published Feb 2, 2026 12:00 am
Investors in equities are turning their focus to upcoming inflation data as catalyst for potential interest rate cuts, seeking signs that price pressures have cooled enough for the central bank to pivot toward easing.
The release of February’s consumer price index will be weighed alongside recent gross domestic product (GDP) figures, which showed a loss of momentum in the final quarter of 2025.
Market participants are increasingly betting that the Bangko Sentral ng Pilipinas (BSP) may find room to lower policy rates during its February meeting to bolster an underperforming economy.
“Hopes that the BSP would cut policy rates in their February meeting may give the market support,” said Japhet Tantiangco, research manager at Philstocks Financial.
He noted that while the local economy’s performance last quarter fell short of expectations, a shift in monetary policy could offset the pessimistic outlook for 2026.
However, some analysts remain cautious about the trajectory of inflation. Online brokerage 2TradeAsia.com expects a “warmer” reading for January as the favorable base effects from last year’s food prices begin to fade.
The firm noted that price pressures in imported rice and weakening peso could drive up landed costs, potentially limiting the BSP’s flexibility despite the growth slowdown.
Beyond inflation, the S&P Global Philippines Manufacturing PMI will be scrutinized for fresh evidence of the economy’s health.
Despite a two-week decline in the Philippine Stock Exchange Index, Tantiangco said the market maintains its mid-November 2025 uptrend.
He added that valuations remain attractive, with the market trading at a price-to-earnings ratio of 10.5 times, significantly below the historical average of 14.4 times.
Market strategists are advising a defensive posture until global macroeconomic signals stabilize. 2TradeAsia.com recommended that investors focus on “high-conviction names with fundamental resilience” to withstand a potential global flight to safety.
In corporate action, Abacus Securities Corp. added Atlas Consolidated Mining & Development Corp. to its “buy” list. While the stock has rallied 85 percent since mid-November, analysts believe it still trails its peers and stands to benefit from record-high prices for gold and copper.
Abacus also signaled a preference for Universal Robina Corp., forecasting a turnaround this year as commodity costs ease and recent price hikes begin to improve margins.
Meanwhile, Unicapital Securities upgraded its target price for Citicore Renewable Energy Corp. (CREC) by six percent following nine-month earnings that beat forecasts.
“We continue to favor CREC as we expect electricity sales to sustain its growth trajectory,” said Unicapital analyst Peter Louise Garnace, noting that the commercialization of new projects and a stable lease income from its REIT subsidiary serve as key catalysts for the stock.