PSEi seen moving sideways

The Philippine Stock Exchange index (PSEi) declined last week as investors started to book profits—a trend that would likely continue in the near term, analysts said. The PSEi fell 1.15 percent last week to end at 7,050.80 while the broader all-shares index was also down 1.13 percent.

The Philippines reported Thursday last week that second-quarter growth came in at 6.4 percent, ahead of expectations. However, investors also cited that this was slower than the 7.9-percent growth in the same period last year.

“The PSEi showed a bearish bias in the closing days of the week as investors left unimpressed on the [second-quarter gross domestic product] results,” Alexander Adrian Tiu, equities analyst with AB Capital Securities Inc., said in a research report. “Despite higher-than-expected numbers, fears that the government may not hit its forecast of 6.5-7.5 percent continue to dampen the bullish momentum,” he added. Tiu said there was continued “bearish bias” this week with an expected slowdown that usually followed the conclusion of the earnings season.

On a technical basis, the immediate support at 7,100 failed to hold, opening the index to further downsides at 6,950 next week, Tiu noted. “In the event that the main support level holds, we foresee the market moving sideways at the 6,950-7,200 range. Given this, investors are advised to remain on the sidelines and accumulate on further pullbacks,” Tiu said.

First Grade Finance Inc. managing director Astro del Castillo also said in an interview that investors should remain cautious in the coming days with the PSEi expected to move sideways. He expected the PSEi to hover near the 7,000 level in the near term.

AB Capital also cited caution in foreign markets due to tensions in the Ukraine-Russia conflict.

“This, along with Nato’s accusations that Russia has been sending both weapons and army into Ukraine continue to put pressure on stocks,” Tiu said. Investors would likely take some direction from an inflation report for August.

“Catalysts for next week include the Consumer Price Index (CPI) for the month of August. The CPI, an indicator of general inflation, can influence the central bank’s decision to ease or hike interest rates in the coming months,” Tiu said. Miguel Camus