By Arra B. Francia
Senior Reporter

LOCAL SHARES may tread higher this week with the end of the Chinese ghost month, alongside likely slower August inflation and another rate cut on the horizon.

The 30-member Philippine Stock Exchange index (PSEi) climbed 1.10% or 86.85 points to close at 7,979.66 on Friday. It was up 1.14% on a weekly basis, but was 0.8% lower month on month.

August snapped the local bourse’s five-month streak of ending with gains due to fears on the US-China trade war as well as the US recession affecting sentiments at home.

“This week marks the end of the ‘ghost month’ which may have been a concern to some investors. The PSEi may break above its resistance at 8,000 this week,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in an e-mail.

Mr. Mangun noted that local investors would have to continue their strong buying momentum to combat the foreign selling that has continuously plagued the PSEi.

He also noted the slower inflation expectations from the local central bank, which may boost sentiment moving forward.

“The Bangko Sentral ng Pilipinas (BSP) sees August inflation coming in below 2% which will continue the downtrend in inflation which we have been seeing. This will be extremely positive for the economy,” Mr. Mangun said.

The BSP Department of Economic Research said it sees August inflation settling within the 1.3-2.1% range, attributed to “lower domestic prices for gasoline, diesel and kerosene, the continued decline in rice prices as well as the downward adjustment in electricity rates dampened inflation pressures during the month.”

If realized, this would be lower than the 2.4% inflation rate seen in July. The lower end of the estimate matches the 1.3% print posted in June to August 2016, while the higher end is equivalent to the 2.1% tallied in November 2016.

The Philippine Statistics Authority will release August inflation data on Thursday, Sept. 5.

Investors could also be looking at the BSP’s next policy review on Sept. 26. BSP Governor Benjamin E. Diokno last week said the central bank wants to cut benchmark rates by another 25 basis points (bps) before the end of the year.

The BSP has already reduced benchmark interest rates by 50 bps this year, or 25 bps each in May and August.

Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said the PSEi will continue to take its cues from western indices.

“Whether the index breakout of the 8,000 mark should be reliant on US market movement in the coming days, and if foreigners continue their inflow like today,” Mr. Perez said on Friday.

AAA Equities’ Mr. Mangun placed the PSEi’s support from 7,630 to 7,750, with resistance from 7,920 to 8,000.