PSEi seen capped at 6,500
Philippine stocks may remain range-bound in the coming weeks as investors weigh weak economic growth against persistent inflation ahead of the Bangko Sentral ng Pilipinas’ (BSP) next policy meeting.
F. Yap Securities Inc. sees the Philippine Stock Exchange Index trading within the 6,200 to 6,500 range over the medium term, with the 6,500 level acting as resistance.
The brokerage said investors could use the next two to three weeks to position ahead of the BSP meeting rather than make firm bets on the central bank’s next move.
It recommended trimming exposure to domestic demand and construction-linked stocks, where earnings could be vulnerable to weak consumption, while riding momentum in energy and semiconductor/materials.
The cautious outlook followed weaker-than-expected second-quarter economic growth.
Against this backdrop, the brokerage maintained its call for another BSP rate hike in August, although weaker economic growth has strengthened the case for keeping rates unchanged.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said another major catalyst for global and local financial markets would include progress, or the lack of it, in negotiations for a more permanent US-Iran peace deal by around Aug. 17.
“Markets would also watch whether US President Donald Trump would pressure Iran into reaching a deal through threats of further attacks, which could risk escalating the conflict,” Ricafort said.
For the coming week, investors will also watch the MSCI August index rebalancing, US inflation data and another batch of corporate earnings.
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