Rebound in PH stocks seen

The local stock barometer is seen to rebound this week as investors are seen to pick up oversold stocks during the downturn in the last two weeks.

Last week, the Philippine Stock Exchange index (PSEi) fell by 2.44 percent to close on Friday at 7,413.15 while the peso depreciated to a 13-year low against the US dollar.

“Despite the sharp drop these past weeks, the market is quite oversold and may be ripe for a technical rebound,” BDO Unibank chief strategist Jonathan Ravelas said.

He noted that the PSEi may emerge to retry the 7,500 to 7,800 levels this week.

Christoper Mangun, head of research at stock brokerage Eagle Equities Inc., noted that foreign selling continued due to emerging market jitters triggered by the crises in Turkey and Argentina.

“However, local investors have picked up the slack supporting issues and preventing a total bloodbath,” Mangun said.

“There is strong indication that the index will end in the green [this] week,” he added.

The next support for the PSEi is seen to come in at 7,350.

“The bottom line is that the market is moving away from relying on foreign funds. The market may take a little longer to climb as it absorbs all this foreign selling but eventually it will stop,” Mangun said.

Most of the trading opportunities this year are in second-liners and speculative issues which will continue until the end of the year or until we see the blue-chips start to perform better, Mangun said.

Last week, the local stock market was battered by P33.52 billion in net foreign selling, resulting in a breach of the 7,500 support level.

“It is quite disappointing that the index broke below the key support level at 7,500. The double-top chart pattern on the daily chart is also quite concerning. It is mainly because investors were not willing to buy blue chips,” Mangun said.

The main index has gone down by 5.6 percent so far this month.

Meanwhile, the peso depreciated by 0.45 percent last week. The government reported a larger-than-expected July trade deficit at $3.55 billion compared to the $3.13 estimate.

Concerns on rising inflation and the ongoing US-China trade war likewise dragged the local currency.