Shares to move sideways ahead of trading break

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By Arra B. Francia
Senior Reporter

LOCAL EQUITIES may move sideways in the week ahead as analysts expect thin trading due to the Lenten season break.

The benchmark Philippine Stock Exchange index (PSEi) fell 0.94% or 74.98 points to close at 7,880.82 on Friday.

The main index registered flattish movement on a weekly basis, as it added merely 0.09% despite a 27% improvement in average daily turnover last week to P7 billion.

The PSEi was able to breach the 8,000 mark last Wednesday when it closed at 8,008.53, but failed to hold on to this level as it quickly fell back to the 7,900 mark the next day.

Net foreign buying persisted last week, averaging at P713 million daily.

“Sessions might stay limited during a three-day trading week given the Lenten pause,” online brokerage said in a weekly market note.

Financial markets will be closed on April 18 and 19 for Maundy Thursday and Good Friday, respectively. Trading resumes next Monday.

“While I expect the PSEi to trade sideways due to lack of fresh catalyst, it’s also possible for our bourse to test if it can stay above 7,800 as central bankers and finance chiefs signal worries about global growth which is tilted to the downside,” Timson Securities, Inc. Equities Trader Jervin S. de Celis said in a mobile phone message.

The International Monetary Fund (IMF) concluded its meeting this weekend, with global finance officials acknowledging the slowdown in global economic growth.

The IMF said its members have agreed to “act promptly to shore up growth for the benefit of all,” while expecting stronger growth by the second half of 2019 leading into 2020.

“If we see a supportive statement from them for the markets this week then we may see an upside move for the PSEi after the Holy Week,” Mr. De Celis added.

After the Holy Week break, investors will also look at how the local central bank will address cooling inflation. Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno earlier said policy easing will be on the table during their next policy meeting on May 9.

“Fund managers might position on BSP chief Diokno’s early hint for monetary easing ahead of their next meeting in May, which might either be in the form of cuts in interest rates or lowering of reserve requirement,” said.

Inflation eased to 3.3% in March, marking the fifth consecutive month it slowed from the nine-year high of 6.7% seen last September and October.

The BSP has kept benchmark interest rates unchanged during its last three policy meetings as it waits for inflation to be firmly within its target of 2-4% this year.

The online brokerage pegged the market’s immediate support at 7,500 for this week, with resistance from 8,000 to 8,100.