PSEi climbs to one-month high

The Philippine Stock Exchange index (PSEi) extended its winning streak on Tuesday, rising for the fifth time in six sessions. It added 58.91 points or 0.9 percent to close at 6,423.85, fully recovering from Monday’s month-end decline of 43.33 points. The index reached its highest level since 28 May and one of the strongest since 10 January this year.

The market’s momentum was driven by the implementation of the Capital Market Efficiency Promotion (CMEP) Law, which took effect on 1 July. The law reduced stock transaction taxes, a move seen to boost trading activity and attract more local and foreign investors by lowering costs.

“The CMEP Law took effect today, and that reduced stock market transaction taxes that could help attract more foreign and local investors into and also increase trading or liquidity in the local stock market with lower transaction costs,” said Michael Ricafort, Chief Economist of Rizal Commercial Banking Corporation.

Adding to investor confidence was the release of the S&P Global Philippine Manufacturing PMI, which rose to 50.7 in June from 50.1 the previous month – marking a two-month high and signaling modest expansion in factory activity after hovering near two-year lows.

Ricafort also noted that traders were positioning ahead of the June inflation report due Friday. While inflation is expected to slightly accelerate from May’s 1.3 percent – the lowest in over five years – it is still seen to stay below the Bangko Sentral ng Pilipinas’ 2 to 4 percent target range. This could give policymakers room to consider further interest rate cuts, including a possible 25-basis-point reduction later this year.

“Philippine shares edged higher as the S&P Global Manufacturing PMI rose to 50.7 in June, signaling slight improvement in factory activity,” said Luis Limlingan, head of sales at Regina Capital Development Corporation. 

“Sentiment was also buoyed by the start of CMEPA implementation, which reduced the stock transaction tax to 0.1 percent. Meanwhile, gold gained on a weaker dollar ahead of key U.S. data, while oil dipped amid easing geopolitical risks and speculation of higher OPEC+ output.”

In the currency market, the peso opened at P56.25 against the U.S. dollar and ended the session at P56.30. The average trading rate stood at P56.243, according to the Bankers Association of the Philippines.