PSE index seen sideways after last week’s gains

By Arra B. Francia
Reporter
SHARES may trade sideways in the days ahead as investors take a breather after the main index’s 250-point increase last week.
The bellwether Philippine Stock Exchange index (PSEi) jumped 0.98% to close at 7,340.18 on Friday, pushing the main index 3.63% higher on a weekly basis.
The financials and property sectors lifted the market, after rising 4.65% and 4.31%, respectively. In contrast, the mining and oil counter dropped 6.43%, dampened by losses in Semirara Mining and Power Corp. and PXP Energy Corp.
Average daily turnover improved by 11% to P8.5 billion, while foreign investors were at a net buying position.
“Going into [this] week, we may see the index trade sideways with a positive bias due to the shortened trading week and investors taking a break after the massive gains we saw this week,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Mr. Mangun said the PSEi’s ability to hold the 7,200 level last week confirms a reversal from its negative trend for the previous nine months, adding that the next major resistance is at 7,500.
“Decreasing oil prices means lower inflation coupled with an appreciating currency will bring investors back into this market and push the index higher. The only concern is the heavy outflow of foreign funds this year,” Mr. Mangun explained.
“(H)owever with western market starting to correct after hitting historic highs this year, there is a possibility that we may start seeing foreign money flow back into our market which will fuel the rally.”
Online brokerage said catalysts include an indication from the US Federal Reserve’s chair that it would retain its status quo on interest rates. This should give central banks in the region time to fine-tune their respective monetary policies.
“An end to quantitative easing does not spell doom, but the tide has already shifted on the fiscal side. This explains why several are embarking on fiscal expansion mode, to support their respective infra growth story. Fund-raising exercises will top these initiatives, a pattern that will be active for both fiscal & corporate front,” said in a weekly market note.
The online brokerage also noted that the rise of the financial and property sectors has historically signaled the market’s recovery from a downtrend.
“The other contender is holding firms (+3.4%), specifically those with fortified initiatives on the infra side (i.e., energy, exploration, telco). We anticipate more tie-ups or M&As (mergers and acquisitions) being harnessed in the process, supporting top-line growth angles,” said.
Eagle Equities’ Mr. Mangun placed the PSEi’s support at 7,000 to 7,200, and resistance is from 7,500 to 7,800.
Local financial markets will be closed on Friday, Nov. 30 for Bonifacio Day.