Santa in quarantine: No spectacle for PSEi ahead of Christmas?

An uphill battle awaits the local stock market in the coming days as investors may lock in gains from the recent run-up while many will switch to holiday mode.

Last week, the Philippine Stock Exchange index (PSEi) added 26.64 points or 0.04 percent to close at 7,272.80. Domestic hands kept the market steady amid a bout of foreign outflows.

“The PSEi has reached a nine-month high of 7,299 last week since it turned from a mid-run base last October, giving it a gain of 21.6 percent inside just eight weeks,” said Ron Acoba, chief investment strategist at trading research provider, Trading Edge Consultancy.

“In the near term, the index though may encounter some choppy trading as it nears a major resistance area of 7,300 to 7,600,” Acoba said, noting this was the neckline support of a prior seven-year top.

Acoba said the index was already trading, fundamentally, at a premium over its 12-month consensus target of 6,952.

He noted the PSEi was also trading at 22 times the projected earnings, much higher than the average price to earnings multiple of 19.8 times in the region.

“These factors may lead to a short-run profiting. Still, its ability to transition from the said base and the return of risk-taking in the global scene may eventually lead the index back to its 2019 levels,” Acoba said.

In 2019, the PSEi closed at 7,815.26, gaining 4.7 percent for the year.

There will only be three trading sessions this week due to the Christmas break on December 24 and 25.