THE Philippine Stock Exchange index (PSEi) is expected to stand on firm ground above the 8,200 mark this week on a generally stable global interest rate environment and optimism over prospects for tax reform.

“We see the PSEi firming-up above 8,200, as excess liquidity finds its way into equities,” said 2tradeasia.com, the online arm of F. Yap Securities, Inc. “Reverting to our 8,500 target outlook at the start of the year, major inflection point is highly considered, if the latest uptrend is sustained.”

It expects immediate support at 8,200 and resistance at 8,350-8,370.

Last week’s final two sessions saw PSEi breaching the 8,300 mark amid trading before retreating to close below the most recent record-high 8,294.14 finish on Sept. 18.

Harry G. Liu, president of Summit Securities, Inc., said positive developments could easily propel the main index to reach 8,300-8,400.

“I don’t see any long-term crisis that is being anticipated,” Mr. Liu said, adding that “only little problems” could get in the way “but I don’t think it’s something to worry about.”

‘WILD CARD’
Still, 2tradeasia.com has not discounted what it called a “wild card” in the coming days, citing new developments in the continuing geopolitical tension between the US and North Korea.

It cited Pyongyang’s threat to test on an “unprecedented scale” a hydrogen bomb in the Pacific Ocean.

The US has called for fresh economic sanctions against North Korea, targeting its financial and trade transactions.

Overall, worsening geopolitcal tensions could induce appetite in mining- and oil-related stocks, as some players flock to assets otherwise deemed risky.

This week’s expectations come immediately after shares soared to new highs and breach past 8,321.

In part, the rise was fueled by the United States Federal Open Market Committee’s move to maintain monetary policy last week, while signaling the possibility of tightening towards the end of the year.

Locally, the Bangko Sentral ng Pilipinas also kept its policy stance steady, even as it raised its inflation forecast for 2019 after maintaining its 2017 and 2018 outlooks.

Also moving the equities market last week was anticipation of the second tax reform package after the first tranche bagged approval by the Senate ways and means committee, raising the possibility of plenary approval before both houses of Congress adjourn for an Oct. 14-Nov. 12 break. The Executive hopes to implement the first tax reform package in January next year in order to help fund the government’s infrastructure push.

PSEi ended last week at 8,281.27, about 1.23% more than its 8,180.85 finish the week prior.

Last week saw P924.791 million in net foreign buying in the last three trading days offset the first two days’ P317.658 million in net foreign selling. — V. V. Saulon

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