Bored traders look to BSP for shot in the arm
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The Bangko Sentral ng Pilipinas’ (BSP) rate-setting meeting on Thursday, June 27, will likely buoy investor sentiment this week, correcting misimpressions from a lack of clear guidance that caused the local bourse’s deepest dive so far this year.
For the first time in seven months, the benchmark Philippine Stock Exchange Index (PSEi) touched the 6,100 level, ending on Friday at 6,158.48, a 3.53-percent drop from the previous week.
Analysts said traders were mostly wary because of the weakening peso and expectations of fewer rate cuts this year, causing the index to extend its losing streak to eight consecutive sessions.
Its longest losing streak was recorded in April, when the PSEi stayed in the red for nine consecutive trading days due to escalating tensions in the Middle East.Short-term
In the short-term, the PSEi may still continue its downtrend due to “persisting investor disinterest,” according to Rastine Mercado, research director at China Bank Securities.
Article continues after this advertisement“We think, however, that this has likely more to do with technical conditions and lack of near-term market catalysts as earnings growth prospects remain intact,” he added.
Article continues after this advertisementBut Mercado noted there may also be hope in the BSP’s policy meeting as investors take cues from the central bank as to when it would begin cutting rates, especially with the “encouraging progress on and improving outlook for inflation.”
Likely within target
London-based think tank Capital Economics had said inflation in the Philippines was expected to likely remain within the government’s 2-percent to 4-percent target range.
It added the BSP may also begin cutting rates in August in a bid to boost needed liquidity.
Trading platform 2TradeAsia.com sees the index’s immediate support level at 6,000 and resistance at 6,300 this week. INQ
