Market awaits outcome of Monetary Board meet

Local stocks are seen to find some relief this week after the heavy sell-off seen last week in the aftermath of Typhoon “Ompong.”

Last week, the main-share Philippine Stock Exchange index (PSEi) lost 30.15 points or 0.4 percent to close on Friday at 7,383 as the extent of damage from the recent typhoon spooked investors.

“Despite the sharp drop these past weeks, the market is quite oversold and may be ripe for a technical rebound to retry the 7,500 to 7,800 levels,” BDO Unibank chief strategist Jonathan Ravelas.

Ravelas said post-typhoon worries added to lingering concerns on the weakening peso and rising oil prices.

The PSEi crossed bear territory anew last week, hitting a low of 7,134.73 last week.

Christopher Mangun, head of research at Eagle Equities Inc., said all things considered, last Friday’s gains proved how well local investors had been weathering the financial storm.

Local investors continued to support this market despite the massive foreign selling seen all year, Mangun said.

“Based on the technicals and market sentiment, the index may trade sideways [this] week as investors sit on the sidelines waiting to see if the BSP will raise interest rates at the Monetary board meeting [this] Thursday,” Mangun said.

“If they raise rates [this] week, we may see the market go up as this will come as a positive to investors that something is being done to curb higher inflation. Another positive effect of an interest hike is it may encourage foreign funds to flow back in to the peso as our currency has performed better than what is expected,” he said.

Meanwhile, the local currency last week weakened by 0.13 percent week-on-week for the sixth straight week to 54.04 against the dollar.

Ravelas expects the currency to range from 53.90 to 54.10 levels in the week ahead.