MANILA, Philippines–Local stocks are seen to continue to trade with caution this week as investors reassess their portfolio after the recent rally to record highs.
Last week, the Philippine Stock Exchange index (PSEi) gave up 94.82 points, or 1.2 percent, week on week to close at 7,730.57, ending a nine-week run-up.
In a research note, AB Capital Securities said the “evening star candlestick pattern” that was formed on Thursday might prove to be prophetic if the index would continue sliding down. The “evening star pattern” is a bearish reversal that usually emerges at the top of an uptrend.
“Hence, investors are advised on the critical support level at 7,650 as a breach will open the index to 7,400,” AB Capital said. Trading range for this week is seen at 7,600 to 7,800, the brokerage said.
In the latest issue of “The Market Call,” a joint publication by First Metro Investment Corp. and University of Asia and the Pacific, the yearend PSE target was seen at 8,300 to 8,500.
With inflation moderating, FMIC-UA&P said the local central bank’s policy rates should remain on hold while the US Federal Reserve was on course for a third-quarter 2015 rate increase. The release of more 2014 full-year corporate results would provide support for Philippine equities, the brokerage said.–Doris C. Dumlao