For the stock market, 6,000 level becoming inevitable

Local stocks are seen to face further headwinds this week as the recently announced MSCI rebalancing takes effect and Monde Nissin wraps up the local tranche of its record P55.89-billion initial public offering. Last week, the main-share Philippine Stock Exchange index lost a total of 70.11 points or 1.11 percent to close on Friday at 6,199.25.

BDO Unibank chief strategist Jonathan Ravelas noted last week’s trades indicated that investor sentiment remained weak, hounded by health and inflation concerns alongside a recent selloff in US markets. As such, he noted that investors continued to stay on the sidelines.

“The week’s close at 6,199.25 signals the market’s continued march toward the 6,000 levels is unfolding,” Ravelas said.

“Should this decline accelerate in the coming days, it could put the 6,000 levels to the test and if it breaks, could put the 5,700 levels within striking distance,” he added.

Manny Cruz, chief strategist at Papa Securities, said one key focus of interest would be the MSCI rebalancing by the tail-end of the week as this was estimated to trigger a foreign outflow of $258.15 million.

The recent adjustments to closely-watched MSCI indices will be implemented as of the close of trades on May 27.

However, Cruz said these hefty foreign outflows should be an opportunity to pick up stocks given the expected improvement in vaccine rollout in the coming months.

“Moreover, the improving COVID-19 pandemic situation in Greater Metro Manila will provide optimism in the market,” he said.

According to Cruz, strong support for the PSEi may be seen at the 6,000 mark.

Meanwhile, the large IPO of Monde Nissin has been sucking up liquidity in the market. Local small investors are allowed to subscribe to as much as P1 million worth of shares.

—Doris Dumlao-Abadilla INQ