THE MOVEMENT of shares this week will depend on the release of inflation data for February — which could dictate how the main index will perform for the rest of the year.
The benchmark Philippine Stock Exchange index (PSEi) dropped 0.83% or 63.72 points to close at 7,641.77 last Friday. On a weekly basis, the main index suffered its largest loss since June 2018 after it shed 4% or 320 points.
All sectors ended in negative territory, with the counters for financials and holding firms posting the biggest losses for the week at four percent each. Decliners prevailed for the week, 116 to 74, while the net foreign selling print stood at P612 million.
“[This] week is the release of February inflation. We see inflation continue to slow which is most likely to be the case, then this may provide the catalyst that this market badly needs to bounce back and start gaining momentum,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
The Bangko Sentral ng Pilipinas estimates inflation to have settled within the 3.7-4.5% range for February, while hinting that the rise in prices is likely to sustain its downtrend for a fourth straight month. This compares to the 3.8% inflation figure seen in February last year.
The Philippine Statistics Authority will release official inflation data on Tuesday.
Mr. Mangun said the “only hope” for the market would be to hold its support level of 7,500. Should it fail to stay above this mark, the PSEi could fall back to as low as the 7,000 level.
“We have seen double-digit percentage growth from several major companies’ earnings however, it has failed to renew investors’ optimism as they continue to be cautious,” Mr. Mangun said.
Meanwhile, online brokerage noted that several firms will be releasing their 2018 financial results this week. This includes Metro Pacific Investments Corp., PLDT, Inc., and International Container Terminal Services, Inc., which account for a 7.3% share in the PSEi basket.
“What may deserve merit is the payout plan for 2019, which will be reliant on capex rollout and other working capital requirement. Any hint of more aggressive rollout may risk reducing expected dividends, unless negated by cost-reduction measures or other income sources,” said in a weekly market note.
Overseas, investors will be watching how the United States and China will iron out their trade deal.
“Global fund managers will heed for clarity how key officials will draft expected milestones from the US-China trade talks extension. Timeline setting will be key to supply chain management, especially for industries that have dependencies on key material inputs,” the online brokerage added.
Eagle Equities’ Mr. Mangun placed the index’s support from 7,500 to 7,600 and resistance from 7,700 to 7,800. — Arra B. Francia