NextGen Day

Despite the suspension of trade in Asia due to the Chinese New Year, the local stock exchange managed to end the week’s first trading day stronger, and the peso maintained its position versus the US dollar.

To reach 7,069.68 points, the Philippine Stock Exchange index (PSEi) increased by 0.19 percent, or 13.06 points.

All Shares then increased by 8.39 points, or 0.23 percent, to 3,691.25 points.

Holding Firms, Financials, and Services all saw gains of at least 0.22% during the day, making up half of the sectoral indices.

The loss was 0.80 percent for mining and oil, 0.35 percent for industrial, and 0.33 percent for real estate.

1.24 billion shares, or PHP8.35 billion, were traded.

99 out of 92 shares were in the green while 55 were in the red.

According to Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC), “Philippine shares nevertheless managed to eke out gains even with Asian markets on holiday, and with the key economic releases happening later.” Limlingan was referring to the Chinese New Year holiday.

At PHP54.54, the local currency was essentially unchanged in relation to the US dollar.

It began trading at PHP54.4 to the dollar and fluctuated between PHP54.6 and PHP54.3, averaging PHP54.388 throughout the day.

Volume increased to USD1.24 billion from USD1.05 billion on Friday of last week.

Michael Ricafort, the chief economist at Rizal Commercial Banking Corporation (RCBC), attributed the peso’s closing on Monday to a number of factors, including the dovish signals from the Federal Reserve and the Bangko Sentral ng Pilipinas (BSP), both of which suggested future rate hikes but at a slower pace due to expectations that inflation will continue to slow down in the US and peak last December for the Philippines.

As a result of clues about the future of local policy rates, he also saw a fall in the rate of locally issued securities.

However, he added, “the recent trend in the US dollar/peso exchange rate is still consistent with the weaker US dollar story recently, as the US currency index compared to major global currencies continued to linger around 7.5-month lows, and recent signals from some Fed officials of a possible smaller +0.25 Fed rate hike/s in the first quarter (1Q) of 2023 amid easing/improving US inflation/CPI (consumer price index) data recently.

In December of last year, the annual growth rate of the US CPI dropped from 7.1 percent to 6.5 percent.

The Philippines’ headline inflation, on the other hand, increased to 8.1 percent last December, its highest level since November 2008, but monetary authorities believe this has peaked, which is why they have called for further increases in the central bank’s key rates, but at a lower level than 75 basis points.

According to Ricafort, “recent improvements in the local financial markets, particularly the stock markets and the bond markets, were also somewhat assisted by the considerably stronger peso exchange rate versus the US dollar, which was among the strongest in 7 months.”

He expects the peso to fluctuate between PHP 54.45 and PHP 54.65 to the US dollar on Tuesday.

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