By Arra B. Francia, Reporter
SHARES are seen to move upward in the week ahead after two consecutive weeks in the red, with more local investors participating in the market amid the exit of foreign funds.
The 30-company Philippine Stock Exchange index (PSEi) gave up 1.38% to close at 7,413.15 on Friday, further widening its weekly loss to 2.44% or 185.49 points. Analysts attributed the massive drop to net foreign outflows that climbed to P33.52 billion last week, significantly higher than the P4.43-billion net sales recorded in the week before.
The holding firms and financial sectors led the week’s losers, shedding 3.5% and 2.9%, respectively.
“Foreign funds have walked away from our market because of the continuous caution on emerging markets which we are,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Mr. Mangun, however, noted that with the absence of foreign investors, locals are “picking up the slack” that has prevented the PSEi to record a total bloodbath.
“There is strong indication that the index will end in the green [this] week. The next support comes in at 7,350. The bottom line is that the market is moving away from relying on foreign funds. The market may take a little longer to climb as it absorbs all this foreign selling but eventually it will stop,” Mr. Mangun explained.
Meanwhile, online brokerage 2TradeAsia.com said investors will be looking at the Philippine peso, which breached the P54 mark last week — its weakest in almost 13 years — after continued fears of the trade war between the US and China. It noted that the weaker peso poses a challenge on listed firms’ spending in the fourth quarter, especially those with imported capital goods or fixed assets.
“Nonetheless, volatility of the local currency should eventually taper off, given the seasonal spike in remittances in 4Q, plus the fact a number of corporates have already undergone inventory hedging since the second quarter,” 2TradeAsia.com said in a weekly market note.
The online brokerage is also looking forward to the signing of an executive order (EO) that aims to control inflation. Malacañang said the EO will contain measures that will seek to lessen trade barriers on the importation of rice, fish, sugar, meat, and vegetables.
“The expected signing of an EO to control inflation…must be properly coordinated for a successful run. Otherwise, unabating (sic) inflation may prod corporates to implement pass-through charges, to maintain their ability to meet working capital needs,” according to 2TradeAsia.com.
Eagle Equities’ Mr. Mangun said there are more opportunities in second-line and speculative issues until the end of the year, lest blue chips start performing better. He placed the PSEi’s support from 7,200 to 7,350, with resistance from 7,500 to 7,840.