Inflation main concern for investors

MANILA, Philippines — Inflation will be a major factor that would drive the market moving forward, traders said.

In a commentary, Unicapital Securities said the continued inflation momentum would call for further rate hikes to curb rising prices. Inflation already reached 4.9 percent in April, its highest in over three years.

The Bangko Sentral ng Pilipinas (BSP) announced a 25-basis point rate hike as inflation continues to heat up while economic recovery picks up speed. The policy rate is now at 2.25 percent, which Unicapital said could cause downside sentiments to persist.

Unicapital expects the BSP’s Monetary Board to be more aggressive in carrying out its exit strategy from its accommodative stance.

“However, the more significant risks to the economic outlook for the country are the inflation risk with the persisting elevated levels of oil and commodity prices and the weakening of the peso against the dollar,” Unicapital said.

Last week, the Philippine Stock Exchange gained by 367.16 points or 5.8 percent, almost erasing the previous week’s decline of 380.73 points or 5.6 percent.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. said the next important resistance levels would be from 6,800 to 6,900 levels versus further upside potential toward 7,000 to 7,200 levels.

Immediate support, meanwhile, is seen at 6,530 to 6,570 levels versus further downside potential, Ricafort said.

The market’s performance this week and in the coming weeks would likely be influenced by several factors, including a further easing of the economy; additional details on the economic team or members of the Cabinet of the incoming administration; trend in global oil and commodity prices and developments on the Russia-Ukraine conflict, which has been ongoing for nearly three months already or since Feb. 24.

The economic team has proposed measures to further re-open the economy, especially the nationwide easing to Alert Level 1 – currently from more than half of total localities.

It has already proposed the resumption of in-person, face-to-face schooling and also measures to further boost foreign and local tourism in the country, among other interventions.

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