As foreign funds continue to stay away from the stock market, investors await fresh macroeconomic reports that may influence the market this week, including the fourth quarter 2020 Philippine economic report.
Last week, the main-share Philippine Stock Exchange index (PSEi) fell by 192.63 points or 2.7 percent to close on Friday at 7,045.83.
“Heavy foreign selling and rotation of flows from blue-chips to nonindex issues contributed to the decline, among others,” said Rachelle Cruz, head analyst at AP Securities.
This week, Cruz said market participants would closely watch out for key macro data: December trade balance on Wednesday, and fourth quarter gross domestic product (GDP) on Thursday.
“Focusing on GDP, consensus forecast for fourth quarter 2020 is an 8 percent contraction which is narrower compared to -11.5 percent logged last third quarter 2020. Any disappointment on the fourth quarter GDP figures though may contribute to downward pressure for the market,” Cruz said.
AP Securities expects the PSEi to continue trending sideways within the range of 6,700 to 7,400 until major catalysts emerge, including the start of wide-scale vaccine inoculation.
With a rising wedge at play for the PSEi, BDO Unibank chief strategist said a break below the 6,928 to 7,000 levels could see further tests toward the 6,500 to 6,700 levels in the near-term.
Since the start of this new year, the PSEi has shed 93.88 points or 1.3 percent. However, it has bounced from last year’s low of 4,623.42 on March 19 during the early days of the quarantine protocols imposed by the Philippine government to curb the COVID-19 public health crisis.
With positive developments on COVID-19 vaccine and the gradual reopening of the domestic economy since June, consensus forecasts point to an improvement in the PSEi this year compared to last year’s full year drop of 8.64 percent.—Doris Dumlao-Abadilla INQ