Local stocks are seen trading with caution this week in sympathy with the global slump in equities arising from the collapse in oil prices.
Last week, the main-share Philippine Stock Exchange index (PSEi) slightly fell to 7,224.21 compared to the previous week’s closing of 7,230.56. Weekly losses were pared down on Friday after Moody’s Investor Service upgraded the Philippine sovereign credit rating.
“Chartwise, expect the index to range between the 7,000-7,200 levels in the week ahead,” said Jonathan Ravelas, chief strategist at Banco de Oro Unibank.
Luis Gerardo Limlingan, managing director at Regina Capital Development Corp., said there was room to accumulate some positions until all technical threats have reversed.
“Keep close watch on 7,160 and 7,030 because these will be the main support levels that the index must hold on to keep the ascending triangle pattern intact,” Limlingan said. “A strong buy will be issued once clear buy signals are generated.”
Joseph Roxas, president of local stockbrokerage Eagle Equities Inc., said that due to weak risk appetite in global markets, sentiment could likewise be sluggish in the first few days of trading this week.
“Longer term, however, what’s not good for others may be good for us,” Roxas said.
As the country imports about 60 million barrels of crude oil and another 60 million barrels in refined oil a year, Roxas estimated that the slump in oil prices from $110 to $60 a barrel would mean about $400 million in savings for oil-importing Philippines a month or about $4.8 billion a year.
He said the impact in terms of lower electricity and transportation costs would be huge for the Philippines.
Roxas said there would still be some yearend rally toward the end of the month as big funds square off positions for the year. Doris C. Dumlao