Globe shares down amid geopolitical tensions, rate cut uncertainty

GLOBE TELECOM, Inc.’s shares declined week on week amid broad risk-off triggered by geopolitical tensions and rate cut delay.

A cumulative 223.405 million Globe shares worth P385.065 million were exchanged on the floor from April 15 to 19, data from the Philippine Stock Exchange shows.

The telecommunications company was the 15th��most actively traded stock last week.

Shares closed at P1,722 apiece last Friday, down by 0.92% from P1,738 a week ago. Year to date, it rose by 0.1% from the 1,720 finish in the last trading day of 2023.

Analysts attributed the decline to the broad risk-off sentiment of investors amid the worsening Israel-Hamas tension and signals of rate cut delays.

“Most of the stock movements this week have been on geopolitical tensions, mainly that between Iran and Israel, and also on the PH and Fed’s rate hike path,” Manuel Antonio M. Castro, equity analyst at Regina Capital Development Corp., said in an e-mail.

For the month, investors have been wary as the central bank remains “somewhat more hawkish” amid upside risks to inflation.

March inflation was at 3.9%, faster than the 3.4% in February. Due to this, the Bangko Sentral ng Pilipinas (BSP) kept borrowing costs at 6.5% in the April monetary board meeting.

This was the fourth straight meeting that BSP has kept the key policy rate unchanged since the off-cycle rate hike of 25 basis points�� in October.

“If inflation settles within target and if economic growth is weaker than expected, the Monetary Board can cut rates as early as the third quarter. Otherwise, it could begin easing as late as the first quarter of 2025,” BSP Governor Eli M. Remolona, Jr. said.

The worsening situation of the Israel-Hamas conflict also contributed to the stock decline.

Rastine Mackie D. Mercado, research director at China Bank Securities Corp., said in an e-mail that “investors turned their focus [for the week] on external developments [on geopolitical tensions].”

The six-month conflict has now worsened as Iran launched a retaliatory attack on Israel on April 13, according to a Reuters report.

Stock decline was since seen across the US and Gulf markets as investors await Israel’s response to the attacks.

Due to these factors, the stock movement of Globe has been on a downward trend similar to that of the PSEi since the start of the month, Mr. Castro said.

Mr. Mercado said that “the near-term lack of catalysts for the telco sector as a whole could continue to generally weigh on investor interest for [Globe].”

Globe’s 2023 revenue amounted to P180.16 billion, 2.9% higher than the P175.04 billion previously.

On the other hand, net attributable income to parent declined by 29.1% to P24.51 billion in 2023 from P34.56 billion in 2022.

Mr. Mercado forecasts Globe’s net income “to be relatively flat [year on year] at P18.7 billion this year.”

While Mr. Castro expects a “low to mid-single-digit growth for the company’s revenues and some declines in the company’s bottom line as the telco business remains saturated.”

He placed Globe’s support and resistance levels at P1,700 and P1,770, respectively.

“Immediate support and resistance levels are at P1,700 and P1,780,” Chinabank’s Mr.��Mercado said. — Andrea C. Abestano