The Philippine central bank is widely expected to raise benchmark interest rates by 50 basis points (bps) or 0.50% at its meeting on Thursday, as the US Federal Reserve is also likely to tighten policy this week.<\/p>\n\n\n\n
At this level, it is evident that BSP is expected to match Fed\u2019s move as a way to protect the value of domestic currency. We note that the Fed is also likely to hike rates by 50bps this week, a slowdown from its 75-bp rate hike last month. <\/p>\n\n\n\n
While these rate hikes and at least for the following rate hike next Feb have already been priced in, the uncertainty lies on whether the Fed will pause its tightening after Feb\u2019s meeting or will it go beyond the expected peak rate of 4.75 to 5.0%.<\/p>\n\n\n\n
Given this, we would remain cautious until we get more clarity on the direction of the Fed, which may take its cue from the upcoming US inflation data due out tomorrow night (PH time). In the meantime, it is advisable for investors to play the sideways \u2014 taking advantage of strengths to topslice and buying back at lower levels.<\/p>\n\n\n\n
Our preferred picks would be SCC (Target Price: P44.00), DMC (Target Price: P12.50), GTCAP (Target Price: P640.00), CNVRG (Target Price: P35.00), URC (Target Price: P168.00), DNL (Target Price: P11.30), SECB (Target Price: P140.00), and BDO (adjusted Target Price: P133.00, post-stock dividend).<\/p>\n\n\n\n