The main index is expected to climb and hit the 6,400 level this week on bargain hunting ahead of the release of September inflation data.
The Philippine Stock Exchange index (PSEi) went down by 64.28 points or 1% to close at 6,321.24 on Friday, while the broader all shares index shed 18.38 points or 0.53% to 3,400.83.
Week on week, the PSEi gained 178.45 points or 2.91% from its close of 6,142.79 on Sept. 22.
For this week, analysts expect Philippine shares to climb, although trading would be driven by the release of key economic data.
“The PSEi may rise to around 6,400 and then enter a tight consolidation phase within the range of 6,300 to 6,400 as it builds momentum,” Seedbox Securities, Inc. Equity Trader Jayniel Carl S. Manuel said in an e-mail.
“The recent unsustainable rally, coupled with a drop on the final day of September’s trading, has raised concerns in the market, which may lead to a consolidation phase aimed at establishing a more stable foundation for growth,” Mr. Manuel added.
The PSEi’s current trading level could still attract investors to pick up cheap stocks, which could push the market higher, he said.
“Despite last week’s rally, the local market remains at attractive levels as its price to earnings ratio as of Sept. 29 is at 13.61x, below its 2018-2022 average of 19.08x. As to whether the bargain hunting will continue [this] week may depend on the upcoming data,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
“Investors are expected to watch out for the upcoming September inflation data as this would give clues on the Philippines’ consumer price situation as well as on the BSP’s (Bangko Sentral ng Pilipinas) policy outlook,” Mr. Tantiangco said.
August inflation data will be released on Oct. 5, Thursday.
A BusinessWorld poll of 17 analysts yielded a median estimate of 5.4% for September headline inflation, close to the lower end of the central bank’s 5.3% to 6.1% forecast for the month.
If realized, this would be faster than the 5.3% print in August but lower than the 6.9% seen last year.
A faster inflation print would drag the market lower “due to the negative implications on our economic performance and the resulting possibility of the BSP tightening further,” Mr. Tantiangco said.
“Higher market interest rates are particularly damaging to high-growth sectors such as consumer discretionary. As a consequence, such sectors are expected to remain volatile, ushering in potential uncertainty,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
Mr. Tantiangco added that investors are also waiting for the release of S&P Global Philippines Manufacturing Purchasing Manager’s Index data on Monday and August labor market data on Friday.
For this week, he placed the PSEi’s support and resistance between 6,150 and 6,600. — SJT