PSEi seen cautious ahead of BSP rate decision

Investors may have to remain selective this week as lingering inflation and peso pressures could keep the Bangko Sentral ng Pilipinas (BSP) from loosening its monetary stance despite growing expectations of rate cuts in the United States.

F. Yap Securities Inc. said it expects the BSP to keep its policy rate at 4.75 percent at its Aug. 27 meeting, accompanied by “very hawkish language.”

This could keep equity valuations capped until the US Federal Reserve provides a clearer signal on the direction of monetary policy, potentially around September.

The brokerage noted that softer US employment data had revived expectations of aggressive Fed rate cuts, raising hopes that the BSP could likewise provide relief or leave rates unchanged.

Against this backdrop, the brokerage advised investors to maintain a defensive bias instead of chasing high-beta cyclical stocks on expectations of lower global interest rates.

F. Yap favored well-capitalized banks with strong deposit franchises, as well as high-yield utilities and conglomerates offering dividend visibility that could rival bond yields.

It also recommended keeping funds available until there is greater clarity on the BSP’s Aug. 27 decision.

Corporate earnings could provide some support, although growth has become increasingly sector-specific.

F. Yap said margin discipline had emerged as a key theme during the second-quarter earnings season, as companies shifted away from the volume-driven strategy seen in late 2025 toward tighter cost management.

The brokerage’s weighted projection points to roughly 8 percent to 12 percent full-year earnings growth, although this assumes a significant acceleration in the second half.

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