September inflation may yet dictate PH shares’ direction
Stock market investors will be turning their attention to the upcoming September inflation report on Oct. 5 as the benchmark Philippine Stock Exchange index (PSEi) held on to recent gains.
Over the past week, the PSEi rallied nearly 3 percent to 6,321.24, partly due to movements caused by a recent off-cycle index change. Analysts, however, advised investors to remain cautious given that past market pumps turned out to be unsustainable.
The upcoming release of inflation data this week could play a decisive role on the market’s direction.
According to the Bangko Sentral ng Pilipinas, inflation may have climbed some more last month given its forecast of prices heating up by 5.3 percent to 6.1 percent compared to 5.3 percent in August.
Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the 6,430 level was the next major resistance level for the PSEi while immediate major support was from 6,200 to 6,150.
First Metro Investment Corp. and the University of Asia and the Pacific said in the latest issue of The Market Call that the past month was weighed down by risk averse sentiments.
“Unlike in the past months when local investors would take the slack left by foreign investors, local investors may have exhausted their bullets and/or had to satisfy margin calls. While [the price to equity ratio] of PSEi has dropped to levels last seen during the World Financial Crisis (2008 to 2009), elevated local inflation rates and US treasuries seem to deter re-entering the market given the present uncertainties,” the report showed.
“However, we remain constructive especially with respect to oversold issues and those with high dividend yields,” it added.
