Traders look to flood control probe, US data

Investors will take a close look at developments on the Philippine government’s probe into the controversial flood control projects after shares ended last week in the red.

Peter Garnace, equity research analyst at Unicapital Securities Inc., told the Inquirer traders would “closely watch the government’s probe into corruption in infrastructure projects for potential economic implications.”

Some contractors that bagged billions of pesos in flood control contracts have been in hot water for a month now after President Marcos blasted them during his State of the Nation Address in July.

These developments, along with the lack of fresh catalysts, caused the benchmark Philippine Stock Exchange Index (PSEi) to decline by 0.1 percent week-on-week to 6,149.

Also, inflation in August quickened to 1.5 percent, although this is still within the Bangko Sentral ng Pilipinas’ (BSP) forecast of one percent to 1.8 percent.

Apart from the flood control fiasco at home, investors will also price in key US economic data, including the recently released jobs report that was “favorable.”

This could make or break the case for the US Federal Reserve’s anticipated rate cut this month, a move that the BSP may mirror.

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Trading platform 2TradeAsia.com pointed out that the Fed’s recent endorsement of a September rate cut showed some promise.

It likewise noted that the PSEi “continues to trade severely behind historical averages and regional peers,” making stock prices “more inviting” for investors.

Garnace sees the index moving within the 6,100 to 6,300 range.