Bank of the Philippine Islands (BPI) Securities Corporation expects the Philippine Stock Exchange Composite Index (PSEi) to hover within 6,300 to 6,500 in the next two weeks as inflation could remain low despite concerns on possible oil price hikes due to the Iran-Israel conflict.
BPI Securities President Mark Race said companies could sustain profit growth as consumers gain extra funds amid declining prices of food, utility, and transport.
"As a major oil importer, the Philippines is exposed to price shocks. However, we take a measured view, year-to-date, the key inflation drivers for the early second quarter reflect moderation, particularly in food and utility costs, and easing transport prices," he said.
"We continue to trade above the 6,300 level, with 6,500 acting as immediate resistance. Over the next two weeks, we expect the PSEi to remain within this band," Race continued.
In its Monetary Policy meeting last Thursday, the Bangko Sentral ng Pilipinas (BSP) downgraded its average overall inflation forecast for this year to 1.6 percent from 2.4 percent.
However, BSP slightly raised its outlook for next year to 3.4 percent from 3.3 percent. For 2027, the Central Bank also increased its forecast to 3.3 percent from 3.2 percent.
The better near-term projection encouraged the BSP to cut its policy rate by 25 basis points to 5.25 percent last Thursday.
"More importantly, the Philippines is a consumption-driven economy with strong fundamentals. Combined with the possibility of lower interest rates, this remains a compelling proposition for select foreign funds," Race said.
Data from the local bourse showed net foreign selling hit P35 to 36 billion as of June. However, he said this reflected a non-drastic and expected movement amid persisting worries about the global economy induced by Trump's tariffs.
"Foreign holdings in Philippine stocks have declined in recent years, which has actually helped reduce the scale of sell-offs during periods of volatility," Race said.