By Arra B. Francia, Reporter
LOCAL EQUITIES may drop in the coming days following their four-day rally last week, with investors cautious on the looming Chinese ghost month.
The 30-member Philippine Stock Exchange index (PSEi) climbed 0.46% or 35.53 points to end at 7,701.38 on Friday.
On a weekly basis, the main index rose 4.08% or 301.77 points, supported by a 5.3% increase in holding firms, 3.8% in financials, and 3.6% in property.
Online brokerage attributed last week’s upward performance to the clarity of some issues brought by President Rodrigo R. Duterte’s state of the nation address last Monday.
“Our ‘wish list’ last week on President Duterte’s third State of the Nation address was highlighted, and the market gave fervor with the resumption of foreign buying. This covers the Duterte administration’s thrust to sequels on the tax reform plan, plus support for provincial expansion under the [infrastructure] agenda,” said in a weekly market note.
Eagle Equities, Inc. Research Head Christopher John Mangun said he will not be surprised to see a pullback for the last two trading sessions in July.
“This was the pullback that was delayed from last week. The index cannot continue to maintain this momentum without relieving some pressure,” Mr. Mangun said.
Analysts are also being wary of the Chinese ghost month, when the index historically goes into a slump as investors typically hold off on trading.
The Chinese ghost month this year will last from Aug. 11 to Sept. 9.
“With the approaching ghost month, some might be prompted to go neutral over the near term and reposition in a more active manner after this period,” said.
For Eagle Equities’ Mr. Mangun, however, the ghost month could spell a different trend this year.
“This year is a very different situation as the index has just bottomed out in July. The index has just broken above the strong resistance at 7,500 and we shall see if this will get investors back into the market regardless of the ghost month,” he explained.
Meanwhile, investors will also be looking at the release of earnings reports for the second quarter. Scheduled to release their financials this week are BDO Unibank, Inc., Manila Electric Co., D.M. Wenceslao & Associates, Inc., Aboitiz Power Corp., Aboitiz Equity Ventures, Inc., Metro Pacific Investments Corp., and Eagle Cement Corp.
“Trends that show improved outlook (especially for core recurring earnings) will be lauded, as players see these listed leaders as proxy in their category,” said.
The online brokerage firm sees immediate support at 7,600 this week, while resistance can play from 7,900 to 7,950.