Desensitized PSEi looking for motivation
Local stocks are seen to consolidate this week as investors await fresh incentives to come into the market in a big way.
Last week, the Philippine Stock Exchange index (PSEi) shed 51.42 points or 0.7 percent to close at 7,238.46.
“The market ended the week marginally lower, as most markets in the region were mixed and seemed to have largely shrugged off the announcement of a $1.9-trillion stimulus plan by US president-elect Joe Biden. It seems to me that investors are becoming more conscious of the inflationary implications of continued stimulus not just by the US, but also other governments as they struggle with mitigating the effects of the pandemic,” PNB Securities president Manuel Lisbona said.
“While the market is staying clearly above the psychological support level at 7,000, it seems that investors have grown numb to the pandemic narrative and seems to have largely ignored reports of a new or mutated virus strain, looking instead for other catalysts to take action,” he added.
The PSEi could find support at 7,070, he said. If this was breached, 6,800 would be the next key barrier, he added.
“The index will likely consolidate between 7,000 and 7,432 if there are no new positive developments,” he said.
Meanwhile, cash remittances that overseas Filipinos coursed through banks rose by 0.3 percent year-on-year to $2.379 billion in November 2020, data from the Bangko Sentral ng Pilipinas showed.
“Remittances have strung together a streak of three months in expansion … despite the odds in order to sustain their families back home. The inflows have helped support Philippine peso, all the more given the sharp implosion in the country’s import demand and government borrowings, with the Philippines now registering a current account surplus and a balance of payments surplus,” ING economist Nicholas Mapa said.
But the benefits from these remittances could be wanting, Mapa said.
“Remittance growth in Philippine peso terms is actually still negative, indicating that the money sent home by the gallant overseas Filipinos are less and less able to cover peso expenses. Thus, the remittance punch that helped fuel domestic consumption, is increasingly less potent in carrying the full weight of the economy on their backs,” Mapa said.He said the domestic market would have to look for other sources to fuel growth. —Doris Dumlao-Abadilla INQ
