PSEi prepares for another tricky ascent to 7,000

The local stock barometer is seen to resume attempts to conquer the elusive 7,000 territory as investors await more clues from the much-awaited meetings of the US Federal Reserve later this week. The Philippine Stock Exchange index (PSEi) fell by 0.83 percent last week, closing Friday at 6,912.85 as investors pocketed gains when the index neared the 7,000 barrier.

The PSEi had pulled back as a result of the Financial Times Stock Exchange index rebalancing after hitting a high of 7,033 early in the week, said Ron Acoba, chief investment strategist at equities research provider Trading Edge Consultancy.

“As trading normalizes [this week] following the said rebalancing, we expect the index to once again knock on its 7,000 resistance. It may take a few attempts but we believe that it is already positioned for an upside swing soon,” Acoba said.

A successful breach of the high of 7,064 seen last July could lead the PSEi back to this year’s peak of 7,300 to 7,400, Acoba said.

BDO Unibank chief strategist Jonathan Ravelas said the market was currently hitting a “wall of worry” amid a confluence of factors: prolonged COVID-19 pandemic, inflation and tapering of monetary stimulus by the US Fed.

He noted that investors last week had taken advantage of an upswing to lighten up positions ahead of the US Fed meetings. The Federal Open Market Committee is set to announce the results of the meetings on Sept. 23 (Manila time).“The week’s close at 6,912.85 signals the market’s failure to sustain the rally above the 7,000 levels,” Ravelas said.

He sees a retest of the lower end of the consolidation range of 6,700 to 7,000.

Since the start of the year, the PSEi has shed 226.86 points or 3.2 percent.

Meanwhile, Ravelas noted the peso’s weekly close at 49.95:$1 highlighted continued consolidation within the 49.70 to 50.10 levels in the near term. INQ