PSEi may test 7,000 as vaccine rollout continues

THE main index is expected to test the 7,000 level this week ahead of the release of manufacturing data and as investors continue to monitor the country’s coronavirus disease 2019 (COVID-19) vaccination program.

The Philippine Stock Exchange index (PSEi) went up by 64.51 points or 0.93% to close at 6,950.51 on Friday, while the broader all shares index rose 29.69 points or 0.7% to end at 4,229.58.

The benchmark index gained 99.13 points week on week.

“The market closed higher for the week mainly due to the BSP (Bangko Sentral ng Pilipinas) keeping the policy rate unchanged and reiterating its stance to continue to support the local economy for as long as necessary to ensure sustainable recovery,” AB Capital Securities, Inc. Junior Equity Analyst Lance U. Soledad said in a Viber message on Friday.

“Investor sentiment likely got a boost from news of stabilizing food prices and pronouncements from the BSP chief that [the] upcoming Fed rate hike are less of [a] threat to the country vis-a-vis other economies. The BSP also held its fourth policy meeting for 2021… keeping rates steady,” China Bank Securities Corp. Research Associate Zoren Philip A. Musngi said via e-mail on Friday.

The BSP left the rate on the overnight reverse repurchase facility at 2%, as expected by 14 of 16 analysts in a ����ý poll. Interest rates on the overnight deposit and lending facilities were also kept at 1.5% and 2.5%, respectively.

Meanwhile, BSP Governor Benjamin E. Diokno last week said the US Federal Reserve’s plan to hike rates by 2023 would be less of a threat to the Philippines versus other emerging markets as the country’s economic fundamentals remain sound.

For this week, analysts said continued progress in the country’s vaccination program will boost investor sentiment.

“Latest figures [show] COVID-19 infections remain high at more than 6,000 while [vaccine] rollout [is] still at less than 10% of the population, far from the 70% to reach herd immunity,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message on Friday. “We may continue to see market move on consolidation from 6,800 to 7,000.”

The Philippines has administered around 9.54 million COVID-19 jabs so far, and at least 215,204 doses are administered daily.

“We think the market will retest the 7,000 resistance level [this] week as vaccine rollout continues to improve,” AB Capital Securities’ Mr. Soledad said, adding a major catalyst would be the release of the June Philippine Manufacturing Purchasing Managers’ Index report on Thursday, July 1.

China Bank Securities’ Mr. Musngi said the PSEi’s attempt to climb to 7,000 will likely be met with strong selling pressure.

“There are little catalysts to justify another strong surge at this point,” Mr. Musngi said. “Note that foreign funds, which contribute around half of market turnover and usually [drive] broad-based rallies in equities, are already cashing in on their gains over the past month.” — Keren Concepcion G. Valmonte