The week ahead

After 26 straight days of foreign net buying, the foreign sellers finally won on Wednesday of last week and then again on Thursday and Friday to finish the week with a three-day selling streak. The PSEi wasn’t able to push up above 7,500 with much conviction, so now we get to see if the index will test the support at 7,000 before we start to hype up into the BSP’s rate announcement.

> PH:  The weekly schedule starts on Tuesday with the listing of the ACPB3 preferred shares from Ayala Corp [AC 722.00 ?1.2%; 57% avgVol], and then there is nothing the rest of the way until Thursday when we have the BSP’s rate-setting announcement.

> International:  US markets are closed on Monday, so we will be without direct US market sentiment until Tuesday/Wednesday. Then there’s a Friday morning US Jobs report, but otherwise, a very quiet week unless the European Central Bank does something outrageous with rates on Thursday/Friday.

MB BOTTOM-LINE:  It’s all about the BSP. Usually, lower rates are understood to promote buying, building, and spending, so it is actually quite important (from a “vibes” perspective) how the BSP will adjust the interest rate in its final two meetings of FY24. If you remember, the BSP beat the US Federal Reserve to the pivot punch by announcing its 25 basis point cut first, but the Fed came over the top with its surprise 50 basis point cut just a few days later. Then we had our Secretary of Finance, Ralph Recto, say that we should do our own 50 basis point cut at this next October BSP meeting, and then we had the BSP Governor, Eli Remolona, warm up to the idea of 50 basis points in total cuts between the last two meetings but come across as non-committal on doing it all in one go later this week. Then, on top of that, we had the September inflation data come in surprisingly low, but so far we haven’t heard Mr. Recto or Mr. Remolona update their positions on the quantity or configuration of the potential cuts. Should get spicy.

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