Shares seen sideways ahead of inflation, holiday

Font Size

PSE bells

By Arra B. Francia

LOCAL SHARES may trade sideways in the week ahead as investors go on holiday ahead of the Chinese New Year, but may get a lift from expectations of a lower inflation report for January.

The bellwether Philippine Stock Exchange index (PSEi) soared past the 8,100 level last week, jumping 1.7% or 136.68 points to close at 8,144.16 on Friday.

On a weekly basis, the main index gained 1.13% or 90.96 points, propped up by the counters for holding firms and financials, which climbed 2.24% and 1.6%, respectively. Net foreign buying for the week was steady at P5.74 billion.

“[This] week is the first trading week of February and with only four days of trading we are going to see lower trading volumes as the holiday is in the middle of [the] week and investors may take a break from trading and take the week off,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.

“The market may continue to trade sideways between 8,000 and 8,200,” Mr. Mangun added, noting that the important thing is for the index to stay above 8,000.

Financial markets will be closed on Tuesday, Feb. 5, in celebration of Chinese New Year.

The shorter trading week will also see the release of inflation data for January. The Bangko Sentral ng Pilipinas projected headline inflation to range between 4.3-5.1%, indicating that it could slow from December’s actual print of 5.1%.

“Official data will be released mid-week, which will be aided by stable supply on key consumer staples and reduced electricity pricing. This would reinforce hopes for BSP to maintain its interest rates, and support capex spending through stable borrowing costs,” online brokerage said in a weekly market note.

Eagle Equities’ Mr. Mangun also said the beginning of the release of earnings reports may also support the PSEi’s performance for the week.

“With earnings reports set to start coming in by next week on top of better inflation numbers for January, we may see the market factor this in and maintain its current trajectory,” Mr. Mangun said.

Apart from local factors, said the market may also factor in resolutions to the trade war between the United States and China.

“The indications also point to a market that has enough room to extend its patience, even as no definite accord is in place yet how the US and China would agree to settle their trade spat. At the end of the extended talks, markets appear to be pricing-in resolutions will be in place, to ensure the two dominant economies’ growth direction stays intact,” according to the online brokerage.

Mr. Mangun placed the PSEi’s support at 7,900 to 8,000, with resistance at 8,100 to 8,300.