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Shares to move sideways on US-China trade talks

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PSE

By Denise A. Valdez
Reporter

LOCAL SHARES are seen to trade sideways this week as investors wait on any developments in the US-China trade talks and the Dec. 15 deadline for imposing tariffs on Chinese goods.

The bellwether Philippine Stock Exchange index (PSEi) ended Friday 136.56 points or 1.76% up to close at 7,877.63. This brought the main index higher by 75.91 points or 0.97% on a weekly basis.

Last week’s market performance marks the PSEi’s second consecutive week of gains, which online brokerage 2TradeAsia.com attributed to reports that a trade deal has been agreed upon in principle by United States and China.

Value turnover improved 3% to P6.11 billion last week, but average net foreign buying was reduced 15% to P76 million.

“With the US Fed[eral Reserve] and local central bank’s status quo on monetary policy already factored into share prices, participants will be heeding to 15 December’s US tariff deadline on Chinese imports that is seen to be preceded by an announcement on phase 1 of US-China trade pact,” 2TradeAsia.com said in a market note, referring to its forecast for this week.




“As this is an ongoing issue, market hopefuls are eager to see either for a rollback on tariffs (best case), or possible extension of deadline (worst case). Overall, an expected ‘Santa Claus rally’ might still be possible in case US-China surprise markets for a truce to get phase one of the deal moving,” it added.

Several news outlets reported late last week that the US agreed to rollback tariffs on Chinese goods in exchange of increased purchases on US agricultural products.

Reuters also reported over the weekend that the phase one trade deal will “provide stability in global trade,” citing Chinese top diplomat Wang Yi.

“If more favorable news comes out over the weekend regarding the trade war, it could push the market further upwards perhaps to test 8,000,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message on Friday.

However, should the trade talks result in less than favorable news, he said the local bourse may consolidate between 7,750 and 7,950.

2TradeAsia.com also said this coming week is an opportune time for bargain hunters as “several large caps were beaten during the rout and have regressed from their highs.”

“With the current liquidity in the system, now is the best time to shop for bargains, ahead of the Philippines’ economic growth story for 2020 and legislative measures that should merit long-term investors’ attention,” it said.

“Expect volatile trades this week, given the final 5-day trading session for 2019. Keep yourself abreast with sequel expansion angles from listed firms aiming to fortify shareholders’ return,” it added.

The online brokerage puts immediate support for the main index at 7,700 and resistance within 7,950-8,000.









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