LOCAL stocks are seen to trade with a bearish bias and thinner volume this week as investors lock up gains as the so-called “ghost month” begins.
Last week, the main-share Philippine Stock Exchange index (PSEi) lost 0.78 percent to close on Friday at 7,963.11 as odds of an interest rate increase by the US Federal Reserve by December increased anew.
The “ghost month” is a period in the Lunar calendar when Chinese investors avoid making big-ticket investments or other major moves like getting married or moving to a new house. This period also coincides with the season when many investors from the West take long summer breaks, thereby resulting in slower trading volumes.
This year, the ghost month will begin on Aug. 3 (Wednesday) and last until Aug. 31.
Banco de Oro Unibank chief strategist Jonathan Ravelas noted that based on the US Fed’s assessment that risks toward the US economy had subsided and the labor markets were getting tighter, conditions might be seen getting more favorable for an increase in borrowing costs.
“Rising US interest rates could also push domestic interest rates higher, especially when inflation is also on the rise,” Ravelas said.
Chartwise, he said the week’s close at 7,963.11 continued to support the view that a near-term top had been set at 8,118.14 on July 22.
“Look for a break below the 7,960 levels to signal further weakness toward the 7,500-7,800 levels,” Ravelas said.
Luis Gerardo Limlingan, managing director at Regina Capital Development, said the PSEi would likely face more corrective pressure this week. He said the trend bias had already shifted from “neutral” or “bearish.” As such, he suggested taking profits until prices stabilize near support points. Doris Dumlao-Abadilla