Foreigners buy most Philippine stocks in two years on BSP Bets

[MANILA] Global investors snapped up the most Philippine shares in more than two years on expectations the central bank will cut interest rates next month to bolster economic growth.

Offshore traders bought a net US$125.6 million of equities on Thursday (Nov 20), the largest daily inflow since Jul 31, 2023, according to Bloomberg-compiled data. The buying has helped lift the nation’s benchmark index this week, set to close about 7 per cent higher.

Funds are rotating back into Philippine shares as they brace for some of the steepest policy easing in emerging Asia. Peso swaps imply about 22 basis points of rate cuts from Bangko Sentral ng Pilipinas (BSP) over the next three months, after an unexpected reduction last month brought the key rate to its lowest since Sep 2022. With local stocks down more than 8 per cent this year, investors are positioning for a rebound.

“Foreign investors pushed the local bourse higher as investor sentiment leaned towards higher expectations of a rate cut, alongside news of Philippine agricultural tariff exemptions,” said Luis Limlingan, head of sales at Regina Capital Development in Manila. “On a technical standpoint, the market was already quite oversold, potentially contributing to bargain hunting.”

Philippine assets have been under pressure following President Ferdinand Marcos Jr’s Cabinet shake-up to contain a corruption scandal. The sentiment has spilled into the economy, with the pace of gross domestic product growth slowing in the third quarter.

The central bank is set to make its next monetary policy decision on Dec 11, with the current benchmark rate standing 4.75 per cent. BLOOMBERG