Shares up on bargain-hunting before BSP review

LOCAL STOCKS rose on Tuesday on bargain hunting as investors stayed on the sidelines ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting and US debt ceiling talks.

The bellwether Philippine Stock Exchange index (PSEi) climbed by 65.75 points or 1% to close at 6,588.90 on Tuesday, while the broader all shares index went up by 28.26 points or 0.8% to 3,519.36.

“Stocks rebounded on Tuesday, ending a two-day slump, as the door is now open for a possible pause in the central bank’s tightening cycle,” Papa Securities Equity Strategist Manny P. Cruz said in a Viber message.

“The local monetary board appears set to pause its hiking interest rates campaign this Thursday (May 18) after inflation cooled for a third straight month to 6.6% in April, significantly lower than January’s 14-year high of 8.7%,” Mr. Cruz added.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message that trading volume remained low, showing that “many investors remain wary of downside risks and will most likely remain on the sidelines until they see encouraging signals from the BSP and good news from the US.”

Value turnover rose to P5.18 billion on Tuesday with 2.7 billion shares changing hands from the P4.14 billion with 1.65 billion issues traded on Monday.

A BusinessWorld poll conducted last week showed 13 out of 18 analysts expect the Monetary Board to keep rates on hold at its meeting on Thursday.

Meanwhile, the remaining five see it hiking borrowing costs by 25 basis points (bps) at this meeting before pausing thereafter.

The BSP has raised borrowing costs by 425 bps since May 2022, bringing its key rate to 6.25%.

Meanwhile, US President Joseph R. Biden and Republican House of Representatives Speaker Kevin McCarthy on Monday prepared for critical debt ceiling talks, with a little more than two weeks to go before the US government could run short of money to pay its bills, Reuters reported.

Democratic and Republican staff were working to find common ground on spending levels and energy regulations before a Tuesday meeting between Mr. Biden, Mr. McCarthy, and three other top congressional leaders.

The White House has not ruled out the annual spending caps that Republicans say must accompany any increase in the nation’s $31.4-trillion debt limit.

Back home, sectoral indices went up on Tuesday save for mining and oil, which declined by 131.01 points or 1.26% to 10,206.43.

Meanwhile, holding firms rose by 78.44 points or 1.2% to 6,566.24; industrials jumped by 94.19 points or 1% to 9,469.94; property gained 25.17 points or 0.93% to end at 2,708.56; financials went up by 9.33 points or 0.5% to 1,851.59; and services increased by 7.08 points or 0.45% to 1,560.58.

Advancers slightly outnumbered decliners, 94 versus 91, while 53 names closed unchanged.

Net foreign buying stood at P30.77 million on Tuesday versus the P7.64 million in net selling recorded on Monday. — A.H. Halili with Reuters