Philippine stocks on course to bull trend as end of tightening nears

The Philippine stock benchmark turned bullish as the country’s central bank signaled that monetary tightening would soon end and the corporate earnings outlook improved as China opened its borders. The peso also stabilized along with most Asian currencies as traders backed away from hawkish rates on the Federal Reserve.

The Philippine Stock Exchange index climbed 1.7%, led by Universal Robina Corp. and Bank of the Philippine Islands. The indicator has gained more than 21% since the September 30 low.

The Philippines and other emerging markets have good prospects. The opening of China and optimism about the US economy support expectations of a global soft landing, not a recession.

Bangko Sentral ng Pilipinas raised the rate by 3.5 percentage points in more than six months to ease the fight against inflation. But since prices have peaked, the central bank may ease the rate hike.

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The country’s manufacturing sector enjoyed a robust recovery last year, helped by increased demand following the pandemic. The S&P Global Purchasing Managers Index for the Philippines rose to 53.

Philippine companies posted earnings in the third quarter that beat consensus, highlighting robust consumer demand despite aggressive interest rate hikes and rising inflation.

The stock index has climbed 5.9% this year, the best performance among major stock markets in Southeast Asia. On Friday, foreign investors bought $12.9 million net worth of Philippine shares, so this year’s inflow was about $19 million. In 2022, the net capital outflow from the country was $1.25 billion.