Shares may climb on inflation data, G20 summit

By Arra B. Francia
Senior Reporter

SHARES MAY firm up in the week ahead in line with lower inflation expectations for the month of June and amid the results of the Group of 20 (G20) summit over the weekend.

The bellwether Philippine Stock Exchange index (PSEi) lost 0.71% or 57.93 points to close at 7,999.71 on Friday. It slipped 0.7% or 55 points on a weekly basis, weighed down by financials and property which dropped 2% and 1.2%, respectively.

Average net foreign outflows persisted, ballooning to P1.45 billion from the P234 million seen the previous week. Turnover, however, improved by 42% to P10.3 billion on average.

“With June inflation numbers coming out [this] week which we are expecting to come in below three percent, this could provide some confidence to investors despite what may come out from the G20 meeting…,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.

The Philippine Statistics Authority will release official inflation data for June on July 5.

The Bangko Sentral ng Pilipinas’ (BSP) Department of Economic Research said on Friday that it expects June inflation to settle within the 2.2-3% range, banking on lower rice and domestic oil prices, lower electricity rates, and the strengthening peso. If realized, the lower end of the central bank’s estimate would be the slowest since November 2016’s 2.1%.

Meanwhile, investors will also take into account the meeting between United States President Donald J. Trump and Chinese President Xi Jinping during the G20 Summit. The two heads of state have reportedly agreed to continue negotiations, although none have provided clarity on whether a deal will be forged within the year.

“Investors all over the world are not confident that President Trump and President Xi will reach a deal to end the trade war and this anxiety may last for weeks as they figure out what to do and how to position themselves in this market,” Mr. Mangun said.

For online brokerage , investors will most likely look at prospects for the second half of the year.

“Review of first semester earnings is in place, and guidance for second half will be watched out for. This early, several are anticipating for improved second quarter GDP (gross domestic product) on the back of approved fiscal budget plus higher consumer spending,” the online brokerage said.

The company also noted that listed firms will have several funding opportunities moving forward given the additional liquidity from the latest reserve requirement ratio to 16.5% from 17% by the BSP. Fund-raising avenues will include listing as a real estate investment trust and preferred float, among others.

placed the PSEi’s immediate support at 7,900 to 8,000, with resistance from 8,200 to 8,300.