PSEi seen easing in cautious trading

After failing to stay afloat the crucial 8,000 mark last week, the local stock barometer is seen to trade with caution this week as investors assess data stream from the fourth-quarter local corporate earnings season.

Last week, the main-share Philippine Stock Exchange index fell by 2.01 percent to close at 7,908.89, weakening for the second consecutive week.

Ron Acoba, chief investment strategist at equities research provider Trading Edge, said the trading bias this week would likely be slightly down to sideways.

The recent pullback was expected given the sharp rise of the PSEi, noting the 19-percent jump of the index in the last 12 weeks since November to test a recent high of 8,200.

“Why is the index suddenly pulling back aside from a resistance at 8100? Consensus fundamental target for 2019 is only at 8,400. We already hit 8,200 and it’s just February. Upside is limited, hence, a pullback or consolidation is warranted,” Acoba said.

From hereon, Acoba sees strong resistance for the PSEi at its 2015 and 2016 peaks at 8,100.

On the downside, Acoba said there was a minor support for the PSEi at 7,650 to 7,850 while a strong support would be at the 7,400 to 7,500 levels.

Jonathan Ravelas, chief strategist at BDO Unibank, said the 2.01-percent decline last week was triggered by global economic growth concerns that have resurfaced as investors questioned the potential for progress on the US-China trade dispute.

“The upcoming changes in the Morgan Stanley Index rebalancing by the end of the month did not help any and is keeping investors sidelined,” Ravelas said.

“The week’s close at 7,908.89 highlights the market’s struggle to stay above the 8,000 levels. With the week’s close below the 8,000 levels, expect a possible test toward the 7,800 to 7,850 levels,” Ravelas said.

On Friday, there was net foreign selling of P489.94 million as the early stream of earnings reports did not excite investors.