Local stocks may continue to trade with caution this week as investors are hardly inspired by the relaxation of quarantine measures in Greater Metro Manila.
Last week, the main-share Philippine Stock Exchange index (PSEi) inched up by 10.65 points to close at 6,269.36 as investors priced in the disappointing first quarter local economic performance and the latest rebalancing of the closely tracked MSCI indices.
Joseph Roxas, president of Eagle Equities Inc., said the easing of COVID-19 restrictions to general community quarantine (GCQ) may have just a slightly positive impact.
“The problem is really liquidity. The people are preparing for the Monde Nissin IPO (initial public offering),” Roxas said.
Although Monde Nissin’s IPO is still pricey, Roxas said there’s a psychological effect when the final offer price was slashed to P13.50 from the maximum P17.50 per share.
Monde Nissin will offer 3.6 billion primary shares and up to 540 million over-allotment option in a massive IPO sized at up to P55.89 billion, including the overallotment option. The offer period will run from May 24 to 28 while tentative listing date is on June 7.
But while caution remains, Roxas said the market’s downside may be limited.On the upside, he said the key resistance would be at 6,400. On Friday, the PSEi hit as low as 6,080.94 before recovering to 6,269.36.
Jonathan Ravelas, chief strategist at BDO Unibank, said last week’s brief drop was a reaction to weak first quarter gross domestic product performance, the MSCI rebalancing, and what he described as a “confusing” shift to GCQ with stringent requirements.