Stuck in a range for months, PH equities seek good news

MANILA, Philippines — A slew of economic data and corporate earnings will keep investors occupied while large funds adjust their portfolios to the Philippine Stock Exchange index (PSEi) rebalancing today, Aug. 7.

The benchmark index shed 2.63 percent the past week to end at 6,450.84.

“The steep selloff last Friday, induced mainly by institutional trades for the PSEi rebalancing, could prompt an index rebound on Monday,” Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said over the weekend.

“Activity for the rest of the week will be driven by Philippine second quarter [gross domestic product] and US July inflation prints, corporate earnings reports and the MSCI index review announcement,” he added.

Colet noted the PSEi remained “mired” in a multimonth range. Major resistance was still at 6,700 to 6,750 while support could be found between 6,370 and 6,400.

New data released the past week also showed domestic inflation further falling for six months in a row to 4.7 percent in July.

“The current path of inflation gives the [Bangko Sentral ng Pilipinas or BSP] the space to keep rates steady until the end of the year. So far, the probability of another hike is low, but it could go up depending on what the [US Federal Reserve] will do,” Bank of the Philippine Islands (BPI) said.

BPI said the BSP might also be prioritizing building up its reserves given the uptick in the country’s external debt.

“The most recent [gross internal reserves] print is now just 85 percent of the external debt. This indicates a deterioration in the country’s external position,” BPI said.

“A weaker external position may also prevent the BSP from cutting rates immediately since it has less buffers to address the volatility that a narrower interest rate differential could bring,” it added.

—MIGUEL R. CAMUS