PSEi may return to 6,000 level on CPI, GDP data

The main index could return to the 6,000 level this week after staying at the 5,900 range in the last three trading days, depending on October inflation and third quarter gross domestic product (GDP) data to be released in the coming days.

The Philippine Stock Exchange index (PSEi) went up by 15.49 points or 0.25% to close at 5,989.27 on Friday, while the broader all shares index rose by 8.88 points or 0.27% to end at 3,263.05.

Week on week, the PSEi climbed by 27.28 points or 0.46% from its close of 5,961.99 on Oct. 27.

“Stocks are set for a technical rebound in the coming week, with shares having dipped into oversold territory. Philippine stocks are projected to rebound after an extended hiatus,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

“The market’s failed attempt to bounce back atop the critical 6,000 resistance level [last] week despite the upbeat price action in offshore markets indicates continued softness in buying appetite, which could lead to a retest of deeper support levels if upcoming data releases disappoint relative to expectations,” China Bank Securities Corp. Research Associate Lance U. Soledad said in an e-mail on Friday.

The market may rise if Philippine inflation and GDP data are positive, China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“Investors will have their eyes on important Philippine economic data this week to assess whether our local market can rally above the 6,000 resistance… After a good trading week in the US spurred by views that the Federal Reserve is potentially done with its rate hike campaign, we may see a bullish spillover to domestic stocks if the October inflation print on Tuesday shows an easing of consumer price pressures and the third quarter GDP release on Thursday paints a better growth picture for the economy,” Mr. Colet said.

October consumer price index (CPI) data will be released on Tuesday and the GDP report will be out on Thursday.

A BusinessWorld poll of 13 analysts yielded a median estimate of 5.7% for October CPI, within the 5.1-5.9% forecast of the Bangko Sentral ng Pilipinas (BSP).

If realized, October inflation would be slower than the 6.1% in September and 7.7% in the same month last year. Still, this would be the 19^th straight month that inflation was above the BSP’s 2-4% target.

Meanwhile, a separate poll of 17 economists and analysts last week yielded a median estimate of 4.9% for third quarter GDP growth, faster than the preliminary 4.3% expansion recorded in the second quarter.

However, this would be slower than the 7.7% growth logged in the same period last year.

If realized, this would bring the nine-month average for GDP growth to 5.2%, below the government’s 6-7% full-year target.

For this week, Mr. Vistan placed the PSEi’s support at 5,800 and resistance at 6,200, while Mr. Colet put support at 5,900 and resistance at 6,150. Mr. Soledad placed the PSEi’s immediate support at 5,830. — SJT