PSEi seen trying to stay above 6,900 level

The local stock barometer is seen trying to stay afloat 6,900 this week as the local corporate earnings season comes to a close.

Last week, the main-share Philippine Stock Exchange index (PSEi) fell by 2.4 percent to close on Friday at 6,968.82. The country’s October inflation figure remained high at 6.7 percent, the same level seen in September, while the country’s third-quarter economic growth was slightly below expectation at 6.1 percent from the revised growth rate of 6.2 percent in the second quarter.

The market fell below the 7,000 level as it digested the recent numbers, BDO Unibank chief strategist Jonathan Ravelas said.

“Chartwise, the week’s close at 6,968.82 highlighted the 6,900 support level provided a good fight,” he said. “Should the 6,900 levels fail to support the market, the next key levels are at 6,500 to 6,800.”

Meanwhile, the conclusion of the third telco bidding also affected the market last week. Investors sold down shares of incumbent telecom players Globe and PLDT in anticipation of the entry of the third player, the consortium led by Davao-based businessman Dennis Uy and China Telecom.

Meanwhile, the 6.1-percent GDP growth in the third quarter was a bit lower than the 6.2 percent market consensus.

“Going forward, growth is seen to likely follow the same formula of late with slowing consumption offset by government spending and investments. Meanwhile, given the burgeoning economy, the trade gap is seen to widen to fuel the pace of expansion, exerting a fundamental pressure on the Philippine peso to weaken,” said ING Philippines economist Nicholas Mapa.

The disappointing growth print may give some ammunition for the doves to call for a pause at this Thursday’s Monetary Board meeting, Mapa said.

“The 150-basis point cumulative rate hike for the year is likely weighing down on consumption and will dampen investment going forward. Holding off on an additional rate hike, as marginal as it may be, would give the Philippine economy the breathing room it needs to catch its breath and resume its above 6-percent growth trajectory in fourth quarter with the mid-term election in sights,” he said.