By Denise A. Valdez
LOCAL STOCKS are expected to continue trading sideways this week with a slight downward bias in anticipation of tamer trading during the month-end.
Despite falling 0.14% or 11.7 points on Friday, the Philippine Stock Exchange index (PSEi) remained above the 8,000 mark by the end of last week at 8,053.20. This kept the main index up 6.08 points or 0.08% on a weekly basis.
The week-on-week uptick was driven by a 1.34% gain in services and 1.1% in industrials, outpacing the slowdown from a decrease in holding firms shares which fell 0.94%.
The week’s turnover value was at P34.21 billion, with net foreign buying at P3.06 billion.
Eagle Equities, Inc. Research Head Christopher John Mangun said the robust performance of the market over the past weeks may lead to a dull trading week ahead.
“Going into [this] week, we may continue to see it trade sideways with a slight negative bias as investors take some profits after the incredible run that we have seen in the last three weeks,” he said in a weekly market report.
Mr. Mangun noted the main index has risen 7.8% for the month — therefore, even a 1% to 2% drop in the coming week will keep the January trading record as “one of the best months that we have had for a while.”
Online brokerage 2TradeAsia.com also said this week may be the right opportunity to enter a technical pause.
“It seems timely for the market to build a new base (at least above 8,000), since its rise from 7,489 at the start of 2019,” it said in a market note.
It also flagged the Chinese New Year break, the adjournment of the local congressional session ahead of the upcoming May election, and upcoming January inflation data as reasons for local shares to trade sideways this week.
2TradeAsia.com also pointed to the United States-China trade deal as one of the factors that will influence this week’s performance.
“This year…we see (earnings per share) improving 12.3% before rising by 17.8% in 2020. Upsides may be considered, pending the outcome of US-China trade talks before end-March’s deadline. Range-trade & go for stocks with commendable upside opportunities. Immediate support is 7,960-8,000 resistance 8,100-8,150,” it said.
But Mr. Mangun of Eagle Equities kept the door open to a possibility for the PSEi to breach the 8,100 mark by the end of January if trading volumes and the flow of foreign money increases this week.
“US equities markets have also started slowing down after bottoming out a few weeks ago. If they continue at this pace, then we may see more foreign money flow into our market,” he said.
He noted the market looks promising, saying, “the PSEi chart looks extremely attractive after the golden cross that we saw on the moving averages and if we take cues from this, we may see it continue to gain traction as more and more investors gain confidence and start coming back into this market.”