Philippine Stock Market Climbs Amid Expectations of December Rate Cut by BSP

Philippine equities experienced gains on Wednesday, propelled by bargain-hunting and optimism surrounding a possible policy rate reduction by the Bangko Sentral ng Pilipinas (BSP) later this year. Investors anticipate that a lower rate could stimulate economic growth amidst a backdrop of slowing domestic consumption.

The Philippine Stock Exchange index (PSEi) advanced by 0.99%, adding 57.05 points to close at 5,813.71. Meanwhile, the broader PSE all-share index increased by 0.62% or 20.29 points, finishing at 3,251.84.

Luis A. Limlingan, head of sales at Regina Capital Development Corp., noted in a Viber message that "the local market ended the day higher, driven primarily by bargain-hunting." He further observed that "investor sentiment improved following signals from the BSP about a potential rate cut before year-end, which encouraged buying activity."

BSP Governor Eli M. Remolona, Jr. indicated the possibility of a modest 25-basis-point reduction when the Monetary Board meets on December 11. Since August 2024, the central bank has trimmed borrowing costs by a total of 175 basis points, bringing the benchmark interest rate down to 4.75%, the lowest level in more than three years.

These rate cuts reflect the central bank's response to slowing economic growth, contained inflation, and declining investor confidence triggered by a recent flood control corruption scandal that dampened business sentiment and domestic spending.

AP Securities, Inc. remarked in a market commentary that "the market continued its gradual ascent and is currently at short-term resistance, supported by local equity purchases while investors await Nvidia Corp.'s earnings results, which could signal the trajectory for US markets."

In contrast, US stock indices slipped, with major benchmarks falling below key technical thresholds for the first time since April amid caution ahead of upcoming retail and semiconductor earnings reports and a postponed jobs data release.

Domestically, sectoral performance was largely positive: Financials climbed 1.77% to 1,932.09, industrials rose 1.55% to 8,517.88, holding firms gained 1.13% to 4,534.39, property increased 0.43% to 2,118.71, and services inched up 0.07% to 2,362.88. The mining and oil sector was the lone decliner, down 0.47% to 12,765.5.

Market breadth favored advancers, with 112 stocks higher against 61 decliners; 67 remained unchanged. Value turnover slightly decreased to PHP 6.23 billion on 886.24 million shares, compared to PHP 6.67 billion on 1.15 billion shares the previous session. Net foreign selling moderated to PHP 915.4 million from PHP 1.31 billion.

The gradual recovery in the PSEi underscores increasing investor confidence that further monetary easing by the BSP could reduce borrowing costs, invigorate spending, and stabilize business outlooks, despite ongoing concerns regarding global market volatility and lingering domestic corruption issues.