SHARES MAY continue trading sideways albeit with an upward bias as investors watch out for April inflation data, the central bank’s policy meeting, and first-quarter earnings reports this week.
The bellwether Philippine Stock Exchange index (PSEi) dropped 0.42% or 33.59 points to close at 7,967.98 on Friday, but was up by 1.3% on a weekly basis after breaching the 8,000 level on Thursday.
Counters for industrials, services, and financials supported the main index’s ascent, after they jumped 3.8%, 1.8%, and 1.76% last week, respectively.
Net foreign inflows, however, slipped by 64% to P149 million, amid positive market breadth at 99 advancers to 91 losers last week.
“The market may continue within this range (7,800-8,000) for a few more weeks but I am still inclined to believe that this market is going to go higher,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a market report.
“Economic fundamentals are just incredibly good right now and even corporate earnings are expected to perform better than what we saw in 2018.”
Online brokerage 2TradeAsia.com expects investors to take cues from the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on May 9. With the BSP research department projecting inflation to be within a 2.7-3.5% range, the Monetary Board may move toward policy easing or cut the reserve requirement ratio (RRR).
“Any rate cut or RRR adjustment might still be countered by higher oil prices, prolonged El Niño’s impact on water and agri resources, as well as increased power rates. Overall, local equities might take heart if easing is supported,” 2TradeAsia.com said in a weekly market note.
The Philippine Statistics Authority will also release key economic indicators this week, namely April inflation data on May 7 and the first-quarter gross domestic product (GDP) report on May 9.
2TradeAsia.com noted how sentiment is skewed towards slower first-quarter GDP growth, citing downward revisions in estimates from the International Monetary Fund at 6.5% from 6.6% and Asian Development Bank at 6.4% from 6.7%, among others.
“World Bank estimates were unchanged at 6.4%. Forward valuation on equities may get the lift, in case growth expectations improve for succeeding quarters,” the online brokerage said.
Aside from the release of economic figures, this week will also see the release of first-quarter earnings results of companies that comprise 40% of the PSEi and 30% of the all-shares index.
These include Globe Telecom, Inc., Ayala Land, Inc., SM Investments, Inc., LT Group, Inc, Ayala Corp., International Container Terminal Services, Inc., San Miguel Corp., and Puregold Price Club, Inc.
Eagle Equities’ Mr. Mangun placed the main index’s support level at 7,800 to 7,900, with resistance from 8,000 to 8,140. — Arra B. Francia