Philippine Stock Market Set to React to GCash IPO and BSP Policy Decisions

The Philippine stock market is poised for notable activity this week, driven by the anticipated initial public offering (IPO) of Mynt Inc., the operator of GCash, alongside the Bangko Sentral ng Pilipinas' (BSP) upcoming policy decisions. The Philippine Stock Exchange index (PSEi) recently closed at 5,782.70, marking a 1.43 percent increase week-on-week, as investors engaged in bargain-hunting despite ongoing external economic pressures.

According to online brokerage 2TradeAsia.com, the market's recovery remains precarious, particularly as foreign investors recorded net selling of approximately ₱1.41 billion last week. The firm noted that the BSP's policy meeting on October 22 is expected to significantly influence market sentiment. A 25-basis-point interest rate hike is increasingly anticipated, particularly following the reported 7.2 percent inflation rate in September.

Japhet Tantiangco, research manager at Philstocks Financial Inc., indicated that the market's reaction will depend heavily on the BSP's decision. He said that a rate hold would be deemed a positive surprise while a rate hike more than 25 basis points would be deemed a negative surprise for the market. He further noted that the PSEi could continue to test its resistance level of 5,800, although trading volumes remain subdued.

“A rate hold would be deemed a positive surprise while a rate hike more than 25 basis points would be deemed a negative surprise for the market.”Japhet Tantiangco, research manager at Philstocks Financial Inc.

The recent depreciation of the Philippine peso, which breached the ₱63-per-dollar level, coupled with elevated global oil prices—Brent crude remains above $100 per barrel—adds to the market's vulnerabilities. Tantiangco warned that further depreciation of the peso could dampen market sentiment, while any rebound might provide necessary support to equities. Additionally, rising oil prices could exacerbate domestic fuel costs, further intensifying inflationary pressures.

Investors are also keenly awaiting Mynt's IPO, which is scheduled for October 20, with shares priced at ₱6.60 each. This offering is projected to raise up to ₱60.9 billion, potentially making it the largest IPO in Philippine history. The strong demand for Mynt's shares, oversubscribed by multiple times, reflects significant interest from both local and international institutional investors, including major firms like BlackRock and the World Bank Group’s International Finance Corporation.

While the IPO is expected to provide a short-term boost to market sentiment, 2TradeAsia has advised caution. The firm continues to favor dollar-earning companies and well-capitalized banks, indicating that it will consider increasing equity exposure only after a strong close above the 5,800 mark for the PSEi.