PSEi seen staying defensive ahead of Fed move
Philippine stocks might remain under pressure this week as investors await the US Federal Reserve’s next policy decision while absorbing the Bangko Sentral ng Pilipinas’ (BSP) bigger-than-expected rate hike.
F. Yap Securities Inc. advised investors to maintain a defensive stance amid the prospect of further monetary tightening and continued volatility in foreign fund flows.
The brokerage said it remained in “sit-out mode,” favoring dollar earners, well-capitalized banks and yield stocks with foreign support.
The firm recommended avoiding rate-sensitive and government budget-exposed companies for now.
F. Yap said investors should consider reducing exposure if the Philippine Stock Exchange index (PSEi) falls below 5,600.
The firm would start adding positions only if the benchmark closes above 5,800 and holds that level after the Fed’s decision.
The US Federal Open Market Committee will meet on Oct. 27 and 28, with its decision due early Thursday in Manila.
Markets largely expect the Fed to keep rates unchanged, but any dissent favoring another hike could signal tighter policy ahead.
A hawkish decision could raise the risk of successive rate hikes by the Fed on Dec. 9 and the BSP on Dec. 17, according to the brokerage.
The BSP last week raised its policy rate by 50 basis points to 5.5 percent, twice the 25-bp increase that the market expected. This brought cumulative tightening since April to 125 bps.
The BSP also indicated that inflation might return to its target range of 2-4 percent only by 2028, leaving the door open for another rate hike in December.
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