Foreign selling seen to drag market lower
The local stock market is seen trading with caution this week as foreign funds continued to flow out.
Last week, the main-share Philippine Stock Exchange index (PSEi) rose by 2.15 percent to close on Friday at 7,747.09 as local investors made up for the slack in foreign appetite.
The close last week signaled that the market is having difficulty sustaining itself above the 7,800 to 7,850 levels, BDO Unibank chief strategist Jonathan Ravelas said.
“There is still some room for further decline toward the 7,000 to 7,300 levels in the near-term,” Ravelas said.
Papa Securities strategist Manny Cruz said the PSEi would likely range this week between 7470 and 7850.
Meanwhile, Ravelas noted that the peso strengthened by 0.89 percent week-on-week to 52.16 against the dollar after the Federal Open Market Committee minutes indicated that a patient approach to interest-rate changes would be appropriate “for some time.”
The local currency will likely consolidate within the 52 to 52.50 levels in the week ahead as 52.50 to 52.60 levels provided a strong defense, Ravelas said.
Meanwhile, the Bangko Sentral ng Pilipinas’ (BSP) monetary easing is boosting the risk appetite of domestic players.
“With inflation is now decelerating and forecast to behave well into 2020 and growth slowing somewhat, this remained the perfect window to release more liquidity into the financial system akin to a transfusion to get the erstwhile anaemic economy back on track,” ING Philippines economist Nicholas Mapa said.
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