PSEi seeks to knock down next crucial level with help from bulls

Investors will be closely monitoring the benchmark Philippine Stock Exchange index’s (PSEi) performance around the 6,200 resistance zone for a possible continuation upward after bulls managed to lift the market from recent lows.

The PSEi gained 0.81 percent last week to end at 6,211.89 while the broader All Shares index added 0.24 percent to 3,324.77.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the PSEi was nearing the major resistance level of 6,220.

Chart-based technical traders see resistance areas as potential pullback zones, however, a breakout past this could push stocks even higher.

For Ricafort, the next resistance zone for the PSEi was at 6,412.94.

Bulls have gathered support in recent weeks amid resilient third quarter corporate earnings and, more recently, the Monetary Board’s decision to keep interest rates steady during its policy meeting last week.

Even then, stocks continue to struggle with weak volumes. PSE chief operating officer Roel Refran said last week that value turnover as of the first nine months of 2023 was down 8.8 percent versus the same period last year.

Refran said the exchange was looking to woo small investors by cutting the minimum investment size for stocks to as low as P100 and allowing the listing of foreign depositary receipts on the bourse by 2024.

Dan Villegas, equity dealer with Maybank Securities, welcomed the PSE’s new initiatives but remained skeptical of the outcome.

“It’s a lower barrier of entry and therefore should attract more retail clients to invest in the market but in terms of overall liquidity, this is unlikely to make much of a dent as our market’s liquidity is driven by both local and foreign institutional investors,” he told the Inquirer.

“Developments such as the proposed bill lowering taxes on stock transactions would entice more institutional participation in our market,” he added.

The PSE formally rolled out short selling early this month although take-up remained weak due to stringent regulatory requirements.

—Miguel R . Camus INQ