RRR cut tilts stock trading upward

February 24, 2025 | 12:00am

MANILA, Philippines — The stock market is expected to gain ground this week following last week’s announcement of a reduction in the reserve requirement ratios (RRR) of local banks, coupled with sustained optimism on corporate earnings results.

Last Friday, the benchmark Philippine Stock Exchange index (PSEi) finished in positive territory at 6,098.04, up by 0.61 percent week-on-week.

“We should expect a stronger market this week with the announcement of the 200-basis-point RRR cut which in effect can lower interest rates plus the strong corporate earnings results,” Sun Life Investment Management and Trust Corp. president Michael Enriquez said.

First Metro Investment Corp. head of research Cristina Ulang said the RRR reduction may lighten up risk-off mood in the market.

“Some upticks for the PSEi likely ahead but to be tempered by MSCI rebalancing-related flow,” she said.

Unicapital Securities head of research Wendy Estacio-Cruz said the index is expected to range between 5,800 and 6,300, with an upward bias this week as the market digests the impact of the Bangko Sentral ng Pilipinas’ decision to cut the RRR to five percent.

“This is expected to result in a five to 10 basis point increase in banks’ net interest margins this year, based on our estimates,” Estacio-Cruz said.

According to the February issue of The Market Call by UA&P, the PSEi will likely trade between 6,000 and 6,500 for the rest of the first quarter without positive economic and political news.

“With expected good corporate earnings for that quarter, a good GDP print for first quarter 2025 to be reported in May and election results may provide the added the stimulus to push the market out of the sink hole in the second quarter,” it said.