Slow trade seen due to lack of buying incentive
The local stock barometer is seen continuing to consolidate below the 8,000 mark this week in the absence of fresh incentive to load up on equities. Last week, the main-share Philippine Stock Exchange index (PSEi) gained 0.97 percent or 75.91 points to close on Friday at 7,877.63. While the Bangko Sentral ng Pilipinas (BSP) kept its key interest rates unchanged on Thursday, BSP Governor Benjamin Diokno hinted at further monetary easing in the coming year.
“A drop in policy rates helps lower cost of borrowing for companies. This helps lower the cost of doing business. Property developers are the obvious beneficiary, this helped boost the PSEi higher,” BDO Unibank chief strategist Jonathan Ravelas said.
On technical reading, Ravelas said the week’s close at 7,877.63 would signal consolidation within the 7,700 to 8,000 levels.
“But risk lies at the break below 7,700, which paves the wave for a test of the year’s low at 7,514.05 levels, which could occur in the near term,” he said.
This week, investors were jittery over the government’s surprise decision not to renew the water contracts of Manila Water Co. and Maynilad Water Services Inc. beyond 2022. This was even after the two concessionaires decided to waive the arbitral award and defer tariff increases.
Meanwhile, global investors tried to make sense out of pronouncements from United States and China on their trade talks.
In China, officials said they were working to set a date to sign the phase one trade deal, which would result in the United States lifting existing tariffs on Chinese goods in phases.
US President Donald Trump also tweeted that there was an agreement to a “very large” phase one deal with China. INQ
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