LOCAL STOCKS are expected to climb beyond the 8,200 mark this week amid increased trading from investors due to the release of second-quarter earnings reports.

Despite posting a decline of 12.67 points or 0.15% on Friday, the bellwether Philippine Stock Exchange index (PSEi) maintained a 0.29% week-on-week increase as it finished at 8,141.82 at the close of last week’s trading.

The increase for the week was driven by a 2.69% gain in financials and 1.01% in property shares, which outpaced the decline in industrials (1.64%), holding firms (0.50%), services (0.32%) and mining and oil (0.03%).

Eagle Equities, Inc. Research Head Christopher John Mangun said for this week, stocks may break the 8,200 resistance with an expected increase in trading volumes.

“Investors may gain confidence as Q2 (second quarter) earnings start to come in (this) week which are expected to come in better than what we have seen in the last few quarters due to lower costs and higher spending,” Mr. Mangun said in a weekly market report.

He added that the influx of foreign funds will help temper the outflows the market has been recording since May.

“Overall, we have another three weeks before trading slows due to the ‘ghost month’ and I am hoping to see a rally before then,” Mr. Mangun said.

Online brokerage 2TradeAsia.com shared the same sentiment on the impact of earnings reports that will come out starting this week. It estimates the PSEi’s resistance to be between 8,250 to 8,350.

“With the release of 1H (first half) corporate earnings, emphasis is placed on possible outperformers: power, infra, property and consumer,” it said in a market note.

It added the improved earnings growth opportunities in the second half of the year may be a driver for the local index to reach beyond 8,200.

“Apart from benign inflation and lower borrowing costs, the extra boost is on improved liquidity, with the third phase of BSP’s (Bangko Sentral ng Pilipinas) reserve requirement cut of 50 bps (basis points) by the end of the month, it said.

“Estimates show the 200 bps total RRR (reserve requirement ratio) cut would bring in P180 billion to P200 billion in the local financial system.”

After a 100-bp RRR cut across all banks on May 31, the BSP trimmed the reserve ratios of universal and commercial lenders and thrift banks by another 50 bps on June 28 to 16.5% and 6.5%, respectively.

Another 50-bp reduction will be implemented on July 26 to finally bring the RRR of big banks to 16% and thrift banks to 6%, which completes the phased cuts the BSP announced in May.

However, the brokerage noted the extended United States-China trade talks may continue to drive market volatility, along with other geopolitical news. — Denise A. Valdez

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