By Arra B. Francia
Senior Reporter

LOCAL SHARES may firm up in the week ahead as investors turn upbeat on the back of easing domestic concerns and the release of May inflation data.

The bellwether Philippine Stock Exchange index (PSEi) jumped 1.7% or 133.47 points to close at 7,970.02 last Friday. The main index racked up 2.9% or 222 points on a weekly basis, driven by industrials which gained 3.73% and property which soared 3.68%.

Net foreign selling also slimmed to P40 million on a daily average last week, significantly lower than the previous week’s P1.2 billion.

“With most local factors resolved, the budget impasse, local elections and the MSCI rebalancing, investors have more confidence now than they have had since the beginning of the year which will fuel the rally,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.

For online brokerage 2TradeAsia.com, the PSEi could reach as high as 8,200 this week.

“The PSEi could range-trade from its current state, or move closer to 8,200, depending on macro-catalysts that would support investors’ renewed zest. The financial system remains awash with cash, and investors are likely to go hunting for bargains with commendable upside,” 2TradeAsia.com said in a market note.

The company said that fund managers will look at whether more money will go to infrastructure spending for the rest of the year, which could lead to improved hiring and in turn support increased consumer demand.

Other factors that could propel the PSEi are the Bangko Sentral ng Pilipinas (BSP)’s steady monetary policy and developments on the tax reform program.

“Efforts to get the mining industry on its feet will be a plus in improving country-side employment and provide funding support for other fiscal initiatives,” 2TradeAsia.com said.

Eagle Equities’ Mr. Mangun also noted that inflation data for the month of May will be released this week. The BSP’s Department of Economic Research said on Friday that inflation likely settled between 2.8% and 3.6% last month due to lower oil and rice prices as well as cheaper electricity rates.

The BSP said there might be an upside following jeepney fare adjustments in Central Visayas and higher prices of selected food items.

“We are still hoping that inflation comes in below three percent to justify the downtrend in inflation which will be good for capital markets. However, if it comes in at three percent or a little higher, it still maintains the government target of 2-4%,” Mr. Mangun said.

Should any pullback be seen, Mr. Mangun said this should be seen as a buying opportunity, “as we are still very bullish with corporate earnings and the economy as a whole.”

The analyst placed the market’s support for this week from 7,800 to 7,890, with resistance from 8,000 to 8,140.

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