Philippine shares are expected to move sideways with an upward bias this week as investors are expecting May inflation rate to remain within the government’s 2 percent to 4 percent target.
Philstocks Financial Inc. research head Japhet Tantiangco said a low inflation print may boost sentiment as this would imply that the Bangko Sentral ng Pilipinas can continue with its policy easing.
The BSP last week said inflation may ease to below 1 percent in May on the back of more affordable food items and lower energy prices.
Bank of the Philippine Islands chief economist Emilio Neri also projected May inflation rate to settle to 1.3 percent year-on-year from 1.4 from in April, implying a month-on-month decline of 0.1 percent.
The sustained drop in rice prices, coupled with lower energy and fuel costs, remained the primary drivers of disinflation.
“However, these factors were partially offset by a rebound in vegetable and fruit prices amid the ongoing dry season, which significantly reduced agricultural output,” Neri said.
Aside from inflation rate, analysts said investors are also expected to look towards the S&P Global Philippines Manufacturing PMI and labor market data for clues on the local economy’s strength.
Investors are also expected to watch out for developments on the global trade front.
Last week, the Philippine Stock Exchange index declined 1.12 percent to close at 6,341.53 while the broader all shares index slipped by 0.62 percent to 3,723.62.
Average daily value traded improved to P12.2 billion from previous week’s level of P6.75 billion.
