Full steam ahead for PSEi

Local stocks may continue trading with an upside bias this week as sentiment on emerging markets improves while local inflation jitters subside.

Last week, the main-share Philippine Stock Exchange index (PSEi) advanced for the second straight week, gaining 256.84 points or 3.63 percent to close on Friday at 7,340.18.

Local investor sentiment has improved following the drop in global oil prices and improvement in emerging market currencies, BDO Unibank chief strategist Jonathan Ravelas said. “This further strengthens the view that inflation could have peaked, thus causing investors to rush back into the market as valuations remain reasonable,” he said.

Last week’s close at 7,340.18 signals some room to further test the 7,500 levels in the near term.

“Momentum is slowly accelerating and supportive of a bounce. A break above 7,500 levels could extend the rally toward 7,800,” Ravelas said.

Christopher Mangun, head of research at Eagle Equities Inc., said the PSE had one of the year’s best performance last week, alongside a pickup in value turnover at P42.5 billion.

“Foreign fund flows were distorted [last] week because of a block sale [on RRHI] worth P9.4 billion but overall, foreign investors were net buyers, which is a very good sign,” Mangun said.

From a technical standpoint, Mangun said the PSEi’s breach of the 7,200 level and ability to stay above such barrier confirmed the reversal of the negative trend seen in the last nine months. “The next step is for the index to break the next major resistance level at 7,500,” he said. —DORIS DUMLAO-ABADILLA