Article by:
Joann Villanueva
MANILA – Deceleration of domestic inflation rate in January 2020 allowed the main stock index to finish the week up but the peso weakened as oil prices in the international market continued to increase.
The Philippine Stock Exchange index (PSEi) rose by 1 percent, or 73.58 points, to 7,456.35 points.
All Shares followed with an increase of 0.71 percent, or 27.74 points, to 3,933.94 points.
Majority of the sectoral indices also gained during the day -- Mining and Oil, 1.99 percent; Holding Firms, 1.64 percent; Property, 1.63 percent; and Industrial, 0.58 percent.
On the other hand, Financials slipped by 0.25 percent and Services by 0.10 percent.
Volume reached 1.75 billion shares amounting to PHP8.64 billion.
Advancers led decliners at 110 to 80 while 54 shares were unchanged.
Rizal Commercial Banking Corporation chief economist Michael Ricafort said the main gauge closed near its pre-pandemic high after the latest easing in the inflation data to new one-year lows and amid continued positive market reaction to Congress' approval on amendments to the Public Services Act (PSA) before the election break starts next week.
“This (PSA) would allow greater foreign ownership for some listed companies,” he said in a statement.
The Philippine Statistics Authority reported the continued deceleration of domestic inflation rate to 3 percent last January from 3.2 percent in the previous month.
It has rebased the consumer price index basket based on 2018 prices from 2012 prices, a practice done every six years to ensure that inflation figures are based on latest price developments.
Ricafort said other factors that lifted the PSEi during the day include the decline in daily cases of Covid-19, easing of movement restrictions in the National Capital Region from Alert Level 3 to Alert Level 2 from February 1 to 15, easing of quarantine restrictions on returning fully vaccinated Filipinos, and entry of fully vaccinated foreign nationals starting February 10.
“Allowing foreign tourists to again travel to the Philippines could lead to more foreign exchange income from tourism in the country, as well as the resumption/increase in business/economic activities related to tourism that may benefit tourism-related businesses/industries in terms of more sales, income, and valuations, including some allied/related listed companies,” he said.
He forecasts the PSEi’s next important resistance at between 7,500 to 7,700 levels while immediate support is seen to be around 7,200 to 7,300 levels.
On the other hand, the local currency finished the week at PH51.14 to a US dollar, weaker than its 51.05 close on Thursday.
It opened the trade at PHP51.00 and ranged between PHP51.14 and PHP50.95. Average level for the day stood at 51.029.
Volume reached USD892.5 million from USD1.05 billion a day ago.
Ricafort said among the factors that affected the PHP-US dollar trading during the day is the rise in international oil prices to its seven-year high due to the Organization of the Petroleum Exporting Countries' increased production.
Other factors were the higher US bond yields, due partly to the 25 basis points increase in Bank of England’s key rate to 0.5 percent and the signal by United Kingdom monetary authorities regarding the unwinding of the central bank’s bond purchases, and the hawkish signal from the European Central Bank
Slower inflation rate in January also negatively affected the local unit, according to Ricafort, because it “could support the continuation of more accommodative monetary policy, despite more hawkish Fed signals in terms of possible more Fed rate hikes in 2022, starting as early as March 2022, to better control/rein in on elevated US inflation recently”.
He said the next important resistance level for the peso is between PHP51.50 to PHP51.80, which he cited is the next important resistance over the past the years. (PNA)
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