POSITIVE third quarter (Q3) results could drive the stock market higher this week, analysts said, but a continued peso weakness could dampen investor sentiment.
The benchmark Philippine Stock Exchange index (PSEi) closed 1.44 percent up week on week at 7,415.73 on Friday, regaining some ground following a 2.1-percent dip a week earlier.
"The latest PSEi gains came after the -0.25 [percentage point] policy rate cut effective Oct. 18, 2024 to 6 percent that could reduce borrowing/financing costs," Rizal Commercial Banking Corp. chief economist Michael Ricafort said.
"[T]he local stock market still lingered among 2.5-year highs, amid net foreign buying for most days for more than two months," he added.
Philstocks Financial Inc. research manager Japhet Tantiangco, however, said the PSEi was "having a hard time getting past the 7,400 — 7,500 resistance range as the weakening of the peso together with offshore uncertainties weigh on sentiment."
The stock market earlier this month rose to an over four-year high of 7,554.68.
The peso, which in September returned to the P55:$1 level, last Tuesday fell to P57.865 against the greenback. It managed to end Friday higher at P57.511:$1.
"[W]e may see bargain hunting [this] week," Tantiangco said, noting that the market remained attractive.
"The monetary policy outlook of the Bangko Sentral ng Pilipinas is still expected to give the market support," he added, but "more catalysts could be needed" to get past the 7,500.
"[U]pbeat corporate results are seen as one of the possible catalysts that could drive the market higher."
Still, Tantiangco said that investors would continue to keep an eye on the peso and that a further depreciation was likely to drag the PSEi down.
Unicapital Group head of research Wendy Estacio-Cruz also expressed concerns about the further weakening of the peso but said this could be cushioned by an easing in Middle East tensions.
"[W]e look forward to upcoming economic data, including the US jobless claims and the PH Global Manufacturing PMI for October, which will be released on October 24 and November 4, respectively," she also said.
Online brokerage firm 2TradeAsia.com, meanwhile, said the final earnings season for 2024 had opened with "very good numbers" and was "expected of sectors with interest rate-sensitive topline drivers."
"BPI's (Bank of the Philippine Islands) recorded earnings close to 30 percent in Q3, ahead of expectations, and bodes well for other issues [and, more broadly, sectors] under our monitoring," the firm added.
The Ayala-led bank last week reported earning a record P48 billion as of end-September, up 24.3 percent from a year earlier. It also posted its highest quarterly income to date of P17.4 billion, 28.9 percent higher year on year.
"Release of corporate guidance, both in earnings and [capital expenditures], heading into 2025 is also expected to strip up additional excitement in the short term," 2TradeAsia said.
As for the BSP, the online brokerage said another rate cut was likely in December, plus four more in 2025.
"Assuming inflation does not surprise to the negative next year and global central banks [like the US Federal Reserve] remain tilted towards easing, the local benchmark rate could go to a little under 5 percent by the end of 2025," it said.
"Hints of capital spending this earnings season coincides with the release of liquidity after the BSP's most recent RRR (reserve requirement ratio) cut," it added.
2TradeAsia.com said investors should anticipate short-run profit-taking as the PSEi attempts to base-build around 7,500.
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