Market seen to continue gaining ground after recent freefall

Local stocks are seen to trade with some upward bias this week, the last trading week before the end of the Lunar Year of the Metal Rat.

The main-share Philippine Stock Exchange index (PSEi) racked up 406.56 points or 6.15 percent to close on Friday at 7,019.18.

Veteran stock broker Joseph Roxas, president of Eagle Equities Inc., said the market seemed to have been recuperating after the freefall seen since mid-January.

Despite a higher than expected year-on-year inflation rate of 4.2 percent in January, which breached the Bangko Sentral ng Pilipinas’ (BSP) ceiling of 4 percent, Roxas noted that the market gained ground last week and even saw some net foreign buying on Friday.

“Maybe they were waiting for bad news before buying,” Roxas said.

The start of a new Lunar year is also typically upbeat especially coming from a horrible year, Roxas said.

The current Lunar year ends on Feb. 11 (Thursday), the day when the BSP is set to conduct its first monetary policy setting for 2021. No change in interest rates is expected from this meeting.

Jonathan Ravelas, chief strategist at BDO Unibank, said the PSEi had risen last week despite the upsurge in inflation rate after BSP Gov. Ben Diokno said the current supply shocks were only temporary and there was no need for monetary action yet.

“The week’s close at 7,019.18 signals another attempt toward the 7,300 levels in the near-term. This comes after strong support emerged at the 6,700 to 6,800 levels,” he added.

This will be a four-day trading week as the markets will be on an official holiday on Friday in celebration of the Lunar Year turnover. INQ