The local stock market is seen to regain some momentum this week as investors take heart from improving macroeconomic indicators.
Last week, the Philippine Stock Exchange index fell by 0.99 percent to close on Friday at 5,908.90. The index has encountered a tough barrier at 6,000 during the week.
Manny Cruz, chief strategist at Papa Securities, said he was expecting sentiment to improve this week after the conclusion of the selloffs from the FTSE rebalancing.
“Bargain-hunting ahead of third window-dressing is also seen to keep the index above 5,700 in the near term,” Cruz said.
He said investors would likely draw strength from a string of encouraging macroeconomic data, including the 7.8 percent year-on-year expansion in overseas remittances in July. This marked the highest volume in seven months and fastest growth in nine months, suggesting the resilience of these flows despite the global economic downturn arising from the coronavirus pandemic.
Cruz said the improvement in power demand in the first half of September could also indicate economic recovery.
However, volatility in Wall Street will be a key risk in the short run that could temper market rally. Cruz said the PSEi could see some resistance at 6,200.
BDO Unibank chief strategist Jonathan Ravelas said the week’s close at 5,908.90 highlighted the PSEi’s vulnerability to selloffs.