Stocks seen trading in tight range

The local stock barometer is seen to continue trading in a tight range until fresh liquidity is injected to the financial system through a reduction in the bank reserve requirement.

But once the market gets some liquidity relief, the Philippine Stock Exchange index (PSEi) can recover to 8,400-8,600 level within this year, PNB Securities president Manny Lisbona said.

Last week, the PSEi fell by 2.83 percent to close on Friday at 7,742.20 as the country’s first-quarter gross domestic product (GDP) came in disappointing at 5.6 percent versus the market consensus of 6 percent.

The market is on a holiday break today because of the mid-term elections.

Lisbona said the market had moved sideways, or in a tight range, in the past few months.

“One reason for that is lack of liquidity; there’s a clamor for liquidity and if this liquidity is released, part of it will spur risk-taking and what’s the risk asset that can provide superior returns? That will be the equity market,” Lisbona said.

Right now, Lisbona said the strategy should be to buy on dips and accumulate equities.