Analyst: No respite yet for PH shares as inflation rears ugly head

Philippine shares are on a near-term downtrend amid risks from higher inflation, amplified by the weakening peso.

BDO Unibank Inc. chief strategist Jonathan Ravelas said investors should thus remain wary of downside risks given the uncertain economic environment.

Rising costs, he explained, would have a direct impact on corporate earnings. This was one of the reasons why the benchmark Philippine Stock Exchange Index (PSEi) was having difficulty rallying above 7,200.

During the previous holiday-shortened week, the PSEi shed half a percent to 6,984.90. Ravelas said the weekly close below 7,000 was indicative of deteriorating sentiments.

“The near-term bias remains on the downside,” Ravelas told the Inquirer. He added that a sustained breakdown from the present area could see the PSEi fall lower to 6,500 to 6,300 as the next support levels.

He said investors could decide to wait for lower prices before entering.

Near-term catalysts include first quarter 2022 earnings while other investors may opt to bet on the post-election play.

Ravelas said the last four administrations going back to President Joseph Estrada saw the PSEi rising by an average 22 percent one year after the elections.

This means investors could gradually increase their holdings should the PSEi and other select equities continue to drop. Traders with a shorter time horizon could lighten positions during rallies, Ravelas said. INQ