PSEi seen testing new highs

The local stock market is seen to consolidate recent gains in the next few days before probing new peaks.

Last week, the main-share Philippine Stock Exchange index (PSEi) gained 1.65 percent to close on Friday at 8,447.94, a new record high. The local stock barometer rallied for the second straight week.

BDO Unibank chief strategist Jonathan Ravelas said investors were positioning ahead of the third-quarter local corporate earnings reports.

“Chartwise, the week’s close at 8,447.94 highlights the market is on track to test the 8,500-8,600 levels in the near term,” Ravelas said, adding that immediate support and resistance levels were at 8,000 and 8,500.

The PSEi is so far decoupling from local currency trends. For the third straight week last week, the peso weakened further by 0.47 percent to 51.39 against the dollar. Ravelas said this was after the latest trade data highlighted the growing deficit, which feeds into the deteriorating current account.

It was reported that the country’s exports in August had grown by 9.4 percent year-on-year to $5.5 billion while imports grew by 10.5 percent year-on-year to $7.9 billion. The August trade deficit stood at $2.4 billion, bringing the year-to-date trade deficit to $17.1 billion.

Joseph Roxas, president of local stockbrokerage Eagle Equities Inc., said the stock market might consolidate for a day or two this week, but noted that sentiment remained positive. He added that President Duterte’s decision to appoint the Philippine Drug Enforcement Agency (PDEA) as the lead agency in charge of the bloody drug war—instead of the Philippine National Police—was another good signal to the market.

Indications of a less hawkish US Federal Reserve also boosted investor sentiment.—DORIS DUMLAO-ABADILLA