By Arra B. Francia, Reporter
THE MAIN INDEX may trade sideways in the week ahead as investors are expected to stay on the sidelines due to the shortened trading week.
The bellwether Philippine Stock Exchange index (PSEi)gained 0.88% or 66.16 points to close at 7,583.52 on Friday. On a weekly basis, the PSEi went down 2.84% or 221.46 points, as all sectoral indices recorded losses. The mining and oil counter suffered the most, giving up 4.25% for the week, followed by holding firms which dropped 3.29% and financials which declined 3.14%.
Net foreign selling swelled to P4.72 billion last week, while daily value turnover averaged at P5.54 billion.
“Foreign investors are concerned as an emerging market like Turkey continues to experience problems with their economy coupled with the strengthening of the US dollar… This, along with the disappointing economic numbers that we saw last week, has put the index’s performance back in the red for August,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Financial markets will be closed on Tuesday for the Islam holiday Eid’l Adha.
“With only four trading days [this] week, we are expecting to see lower volume. However, local investors may treat this as a buying opportunity as several blue chips have pulled back last week. If this happens then we may see the index go sideways or even gain a little,” Mr. Mangun said.
For the index to post a positive trend, online brokerage said investors will be looking at the resolution of trade tariff issues, improved job growth, the government’s efforts to contain inflation and expectations of good earnings for listed firms.
The US and China have already initiated talks to solve their trade spat before leaders of the respective countries meet at the G20 Summit in November. also noted that the trade war will have a more direct impact on currencies, since the new tariffs will affect pricing.
“For now, we have seen several listed firms frontloading on necessary inventory, to insulate on production or project costs, especially in meeting [fourth-quarter] demand. So long as the ‘political noise’ is controlled, markets shouldn’t be quick to press their panic button,” the brokerage said.
The company also noted investors will be going for stocks that show a sustainable earnings model, modest growth and improved dividend yield.
“Markets will be willing to take on a premium if these are well integrated on listed shares’ growth plan. Fortunately, there are several companies trading at a discount to their cashflow potential, and it would only take a matter of time, once these firms are noticed, once the dust settles in,” said.
Eagle Equities’ Mr. Mangun placed the index’s support at 7,530 to 7,440, while resistance could reach 7,650 to 7,800.