Local stocks to take cue from trade talks
Trade talks with the United States will be the main market mover this week. Anxious investors are looking for the next big thing to jolt life into the local bourse after last week’s worries.
Japhet Tantiangco, head of research at Philstocks Financial Inc., said Washington’s planned 20-percent import tariff on Philippines goods “is still expected to weigh on sentiment.”
“Hence, investors are expected to watch out for clues on the Philippines’ trade negotiations with the US,” Tantiangco said.
“Signs of progress may help lift the local market, but lack of positive trade talk developments may pull the market lower,” he added.
The benchmark Philippine Stock Exchange Index (PSEi) last week closed higher by 1.01 percent week-on-week. It reached 6,459.88, mainly due to early gains.
However, Trump’s latest trade move in the middle of the week ended the local stock barometer’s short stint at its two-month high of 6,504.34.
Analysts were not too worried about this latest development. They noted that the Philippines was less reliant on exports for growth versus its neighbors.
Trading platform 2TradeAsia.com also said electronics and semiconductors were not covered by the new duties. These account for over half of the Philippines’ exports to the United States. Thus, they present a possible saving grace.
While the new tariff rate is higher, 2TradeAsia said that it was relatively lower than the 36 percent awaiting regional peers Cambodia and Thailand.
This makes the Philippines a more attractive investment destination while also providing opportunities during supply chain reconfiguration.
Tantiangco said investors will also look at upcoming cash remittance data.
