By Revin Mikhael D. Ochave, Reporter
THE BELLWETHER Philippine Stock Exchange Index (PSEi) might even see a “relief rally” this week after entering bear territory last Friday, with market movements prone to be driven by upcoming economic data.
“Barring any negative surprises, a relief rally is feasible,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“This week’s market motion might be driven mainly by the Philippine January inflation report, US December jobs data, and the evolving situation on tariffs,” he added.
The PSEi plunged by 4.01% or 245.07 points to shut at 5,862.59 on Friday — its lowest finish in 27 months, because the 5,853.63 close on Oct. 12, 2022.
The major index officially entered bear territory after dropping over 20% from its intraday high of seven,604.61 and highest close of seven,554.68, each recorded on Oct. 7 last 12 months.
The broader All Shares Index also declined by 2.19% or 79 points to three,520.32.
Philippine inflation data for January might be released on Wednesday, Feb. 5. The Bangko Sentral ng Pilipinas (BSP) recently projected that January inflation could range from 2.5% to three.3%, inside its 2% to 4% goal range.
On Feb. 1, US President Donald J. Trump imposed a 25% tariff on goods from Mexico and Canada, in addition to a ten% tariff on products from China. He demanded that these countries act against the flow of fentanyl into the US, in addition to address the problem of illegal immigration within the cases of Mexico and Canada.
“The January inflation data out on Feb. 5 must not add to the gross domestic product (GDP) disappointment,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.
“Inflation should decelerate below last December’s 2.9% and beat consensus estimates. If not, the market will remain within the bear trap,” she added.
Last Thursday, Philippine Statistics Authority data revealed that the country’s GDP expanded by a weaker-than-expected 5.2% within the fourth quarter, bringing full-year growth to five.6%, wanting the revised 6% to six.5% goal set by the federal government.
COL Financial Group, Inc. Chief Equity Strategist April Lynn Lee-Tan said in a Viber message that the PSEi is predicted to get well next week following adjustments to the index’s composition.
“There’s a probability next week for the market to bounce back immediately since the index rebalancing is already done,” she said.
“Last Friday, a whole lot of fund managers needed to sell their other index stocks to make way for the addition of AREIT, Inc. and China Banking Corp. (Chinabank). Since volumes were so thin, they’d to sell at a cheaper price to get their orders through,” she added.
AREIT, Inc. and Chinabank will join the 30-member PSEi starting Monday, Feb. 3, following the market operator’s index review for 2024.
The 2 firms will replace Nickel Asia Corp. and Wilcon Depot, Inc., which can grow to be members of the 20-member PSE MidCap Index.
Philippine Seven Corp. may also join the PSE MidCap Index, replacing DDMP REIT, Inc.
Robinsons Land Corp. might be added to the PSE Dividend Yield Index following the removal of International Container Terminal Services, Inc.
All sector indices will remain unchanged aside from the commercial sector, which can see the addition of Pryce Corporation and the exclusion of Fruitas Holdings, Inc.
“This was a rare circumstance since the drop was resulting from index rebalancing. I’m optimistic that we must always bounce back next week,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message.
“We’ve got Philippine inflation coming out next Wednesday and US jobs report coming out next Friday. These two data points could dictate market direction next week,” he added.
Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that a “healthy upward correction” is feasible for the local bourse next week.
“The market can also be waiting for bottoming out signals to do some bargain-hunting, avoiding a risk of further losses. It remains to be wait-and-see until the dust settles and to grab opportunities for long-term purchases of high-quality listed firms with strong valuations,” he said.
