LOCAL SHARES are seen to move upwards on the first trading day and week of 2020 as investors expect the signing of the national budget for this year and positive developments in the US-China trade war.

The bellwether Philippine Stock Exchange index (PSEi) closed the previous year on a negative note, losing 0.34% or 27.02 points to 7,815.26. The market was up by 4.7% from its finish of 7,466.02 in 2018.

“We have an upward bias for the first trading day and week of 2020. The national budget is also expected to be signed on time this 2020. Coupled with the low interest rates, we have accommodative policies that could boost the market [this] year,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial Inc. said in a text message.

The proposed P4.1-trillion national budget for 2020 secured approval from the Bicameral Conference Committee on Dec. 12. It was also ratified by both the House of Representatives and the Senate on the same day. What is left is the signature of President Rodrigo R. Duterte for its enactment.

This is seen to prevent the delay that happened with the P3.757-trillion budget for 2019 which was signed April 15, where about P95.3 billion was vetoed. This, coupled with the ban on new public works ahead of the May 13 midterm elections, slowed economic growth to 5.8% in the first three quarters of 2019 from 6.2% year-on-year and versus the 6-7% target of the government for 2019.

Mr. Tantiangco also expects some bargain-hunting as many shares remain at attractive levels and amid favorable developments in the negotiations between US and China.

US President Donald Trump announced that he will be signing the phase one deal of the two economic giants’ trade agreement on Jan. 15, which will be signed in Washington. This is expected to reduce tensions between the two.

Negotiations for phase two of the deal will then be done in Beijing.

“These could induce investors to take up positions by the start of 2020. Support is at 7,800 while resistance is at 8,000,” Mr. Tantiangco noted.

“With the early approval of the 2020 budget plus the continued approval of the spending of the 2019 budget coupled with the positive developments in the US-China trade negotiations, this will provide better growth prospects for the incoming year,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a separate text message, and placed the PSEi’s support and resistance levels at 7,772 and 7,900, respectively, this week.

On the other hand, PNB Securities, Inc. President Manuel Antonio G. Lisbona is projecting slow trading given the shortened week and with many investors still on holiday.

“Movers will be the water concessionaire related names (AC [Ayala Corp.], DMC [DMCI Holdings, Inc.], MPI [Metro Pacific Investments Corp.], and MWC [Manila Water Co., Inc.]). Trading range will be 7,700 to 8,000,” he noted. — Vincent Mariel P. Galang