Stocks likely to climb on bullish growth outlook

By Arra B. Francia
Senior Reporter

THE MAIN INDEX may continue moving higher in the coming week as investors count on increased spending to boost economic growth.

The 30-member Philippine Stock Exchange index (PSEi) rose 0.3% or 24.12 points to close at 7,983.98 last Friday.

On a weekly basis, it was up 0.18% or 14 points thanks to a 0.9% increase in holding firms and 0.2% uptick in property. This offset the 0.74% decline in services and 0.7% drop in industrials.

Turnover slipped by nine percent to P8 billion, while foreign investors were net sellers at P77 million on average for the week.

“While some have become less sanguine on economic growth prospects for the remaining semester of 2019, there is reason to believe improved opportunities are in store for the Philippines,” online brokerage 2TradeAsia.com said in a weekly market note.

2TradeAsia.com said the economy will gather enough momentum on the back of infrastructure spending, especially once authorities start awarding projects.

“All it takes is to get all other sectors in the economy working, especially for major pending economic bills.”

Abroad, investors are watching the US central bank’s next move as Federal Reserve Chairman Jerome Powell hinted at sooner-than-expected interest rate cuts to temper a potential economic slowdown due to its trade war with China.

“Whether or not this would be enough to pacify markets however depends on jobs improvement data where consumer and investment spending is largely anchored. Such plus side works well for equities, as it reduces pressure on borrowing costs while more will be prompted to seek higher alternative yields,” 2TradeAsia.com said.

The US-China trade war, however, may continue to keep investors on the sidelines. The US and China are set to meet at the G20 Leaders’ Summit from June 28 to 29, with US President Donald J. Trump promising to postpone his next round of tariff increases until then.

On a technical note, Eagle Equities Inc. Research Head Christopher John Mangun said the PSEi is looking “better and better.”

“This is the third week in a row that it has ended with gains which is quite impressive because of all the profit-taking that we saw last week,” Mr. Mangun said in a weekly market report.

“A break above this resistance level will confirm a breakout of its congestion area between 7,500 and 8,000 which it has been in since the beginning of the year. This is the optimum scenario and would signal to investors that the market rally to the upside has began,” he said.

Should the PSEi fail to break out of the 8,150 level, Mr. Mangun said it will still be in good shape if it stays above 7,900.

The analyst placed the market’s support at 7,840 to 7,900, with resistance from 8,000 to 8,150.