PSEi to rise on bargain hunting, window dressing
PHILIPPINE STOCKS may rise on bargain hunting in the coming days after three weeks of decline as well as month-end window dressing, but sentiment is expected to remain week due to lingering economic concerns here and abroad.
The bellwether Philippine Stock Exchange index (PSEi) climbed 152.33 points or 2.51% to end at 6,217.56 on Friday, while the broader all shares index improved by 52.90 points or 1.61% to finish at 3,337.63.
Week on week, the main index dropped by 1.8% or 114 points from its close of 6,331.56 on June 17.
Online brokerage 2TradeAsia.com said in a market note that the market continued to decline following the Bangko Sentral ng Pilipinas’ (BSP) decision to raise its benchmark interest rates for the second consecutive meeting amid rising inflation.
“As the macro environment remains volatile, note that the allure of cash flow-secure/high dividend yielding securities are warranted as the market contends with fixed assets that reprice at higher rates. Brace for quarter-end window dressing activity from funds,” 2TradeAsia.com said.
“With already three straight weeks of decline, episodes of bargain hunting may be experienced in [this] week’s trading. Still, bearish sentiment is expected to remain weighing on the overall market amid lingering downside risks,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “This includes the weakened peso, which is already nearing the P55 per US dollar level, mounting upside risks to inflation, and the possibility of a global economic slowdown amid the recession risk in the United States, and the ongoing Russia-Ukraine war.”
Mr. Tantiango said the market will also monitor the latest purchasing managers’ index data for clues about the local economy.
The BSP on Thursday raised benchmark interest rates by 25 basis points (bps) for a second straight meeting to cool rising prices and continued to signal gradual normalization, even as it said it is prepared “to take all necessary policy action” to bring inflation within its target over the medium term.
The BSP raised its average inflation forecast for this year to 5% from 4.6% previously, well above its 2-4% target.
With the market hoping for a 50-bp increase from the BSP as inflation risks mount, the local currency dropped to its lowest in nearly 17 years on Friday, closing at P54.985 against the dollar, data from the Bankers Association of the Philippines showed. It was the peso’s weakest finish since it closed at P55.08 on Oct. 27, 2005.
“The market’s immediate support is seen at the 6,100-6,150 range. Immediate resistance is seen at the market’s 10-day exponential moving average, at 6,308.05 as of June 24,” Mr. Tantiangco said.
Meanwhile, 2TradeAsia.com put the PSEi’s immediate support ay 6,000, while resistance is at 6,300-6,400 and Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort placed immediate support at the 6,000 mark and the next resistance at the 6,500 level. — R.M.D. Ochave
