PSE index to consolidate as market looks for leads

By Arra B. Francia, Reporter
THE MAIN INDEX is seen to continue consolidating in the week ahead as investors look for catalysts that could sustain an upward trend in the long run.
The 30-company Philippine Stock Exchange index (PSEi) slumped 1.09% or 82.99 points to close at 7,500.53 on Monday, bucking the positive performance of international markets as investors decided to take profit ahead of trading break due to the Islam holiday Eid’l Adha on Tuesday.
Net foreign outflows persisted for the seventh straight day, amounting to P670 million on Monday, albeit lower than the previous session’s P900.63 million in net sales. Value turnover was also flat at P5.40 billion.
In contrast, markets overseas logged gains as they looked to the upcoming negotiations between United States President Donald J. Trump and Chinese President Xi Jinping to iron out trade tensions this week.
Analysts expect the local bourse to continue trading sideways in the coming days, given the lack of catalysts and the need for the government to institute reforms that would place them on track to reach economic targets.
“The market will continue to be on consolidation. The index will be hovering around 7,400 to 7,600, I think that will go on for until the early part of October because the market seems to be illiquid starting from the month of August to October,” Diversified Securities, Inc. trader Aniceto K. Pangan said in a phone interview on Monday.
“It’s illiquid until probably the much needed reforms and inflationary pressures have been reined upon to the tune of the government’s target of 2-4%, then the market can sustain going up,” Mr. Pangan added.
Online brokerage 2TradeAsia.com also noted the private sector’s contribution to help contain inflation.
“Effective supply chain management, production efficiencies are considered important elements to keep goods/service prices in check. Purchase order renegotiations might be in store, & financing arrangements may be re-tooled, to ensure working capital needs are supported,” the company said in a weekly market note.
“Unless the private sector fulfils its part on these items, pressure might run high on monetary authorities to re-check on policies (again and again),” it added.
The online brokerage added companies must follow through on their employment initiatives, as more projects are rolled out in key provincial sites.
“Expediting the [infrastructure] drive should be supported by labor measures attuned to project-based undertakings, especially if the gestation to complete is long-term,” 2TradeAsia.com said.
Regina Capital Development Corp. Managing Director Luis A. Limlingan said the PSEi’s 7,500 support level remains intact, noting in a mobile message that there may be “a possible drive come Wednesday from the returning participants.”