Black and blue, PSEi braces for 2nd half of 2023

Trading activity could pick up during the holiday-shortened week as investors place fresh bets ahead of the second half of 2023.

Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said activity might be driven by “window dressing and technical trading as the first half of the year draws to a close.”

“Investors will also start looking to position for the next half of the year as they assess the outlook for inflation and interest rates, and whether central bankers can ensure a soft economic landing against a backdrop of the most hawkish Philippine and US monetary policy in decades,” he added.

The benchmark Philippine Stock Exchange index (PSEi) slumped 1.76 percent to 6,393.55 the previous week on weaker average daily volumes.

For now, the PSEi was just below the “critical juncture” of around 6,400, Colet said.

Bulls will need to defend this area to prevent further downside to the 6,350 to 6,300 support zones.

“I expect many bargain hunters to emerge at and near those levels, which should cushion any weakness and potentially set the stage for a near term recovery,” Colet noted.

The major news event last week concluded with an expected result: The Monetary Board kept the key policy rate unchanged during its Thursday meeting.

“We still expect the [Bangko Sentral ng Pilipinas] to keep the policy rate steady at 6.25 percent until [the third quarter of] 2024,” HSBC Global Research ASEAN economist Aris Dacanay said in a note to investors last week.

“We think there is less pressure for the BSP to maintain the current policy rate differential since the [dollar] is already less strong than before … albeit strengthening as of late,” he said, adding the regulator has been raising its foreign exchange reserves beginning in the fourth quarter of last year thus bolstering the peso.

—Miguel R. Camus INQ