THE Philippine stock market is expected to remain under pressure after slipping below 6,000 last week, with analysts pointing to rising interest rates, geopolitical tensions and currency weakness as key headwinds.
The benchmark Philippine Stock Exchange index (PSEi) closed at 5,943.49 on Friday, falling by 0.93 percent week on week.
Philstocks Financial Inc. research manager Japhet Tantiangco said the market had entered a bearish phase, extending a losing streak as investors digested uncertainties stemming from the Middle East war and a Bangko Sentral ng Pilipinas (BSP) rate hike.
Amid the current weaknesss, Tantiangco said that valuations had become more attractive, with the market trading at a price-to-earnings ratio of around 10x — its historical average of 14.4x.
“Despite being at a bargain, the local market is still seen to have a bearish default in next week’s trading,” he continued, citing continuing geopolitical risks, expectations of rising inflation and interest rates, and the peso’s sustained depreciation.
Online brokerage 2TradeAsia.com echoed the cautious outlook, noting that the index’s drop below 6,000 reflected sustained downward pressure following the central bank’s hawkish shift.
“The immediate tightening of credit conditions is a headwind for local equities, one that will likely stick,” it said, adding that global capital flows were also shifting toward defensive assets such as oil.
The brokerage also pointed to thinning market participation and continued foreign selling, albeit at a slower pace, as investors remain wary of risks tied to elevated oil prices and global uncertainty.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the market’s decline also tracked the peso’s weakness and rising crude oil prices, alongside hawkish signals from the BSP.
Ricafort added that the lack of progress in US-Iran negotiations and the continued closure of the Strait of Hormuz have kept global markets on edge, contributing to volatility in equities.
Analysts said the market’s direction was likely to be dictated by developments in the Middle East as well as upcoming economic data releases and the result of a US Federal Reserve policy meeting later this week.
