‘Ghost month’ effect to linger this week

MANILA, Philippines - Share prices may continue to decline this week, consistent with the bearish sentiment prevailing in the ghost month but analysts said the rest of the year would still see stock prices recover.

“Due to the lack of any upcoming positive news, the PSEi may trade lower to the secondary support of 7,700. Otherwise, we may see a rebound at the immediate support at 7,840 and trade back in the 7,900 to 8,100 range,” said Victor Felix of AB Capital.

However, overall, he said there is reason to remain bullish for the rest of the year.

“There is reason to remain bullish for the year as we still see August as a month of correction. Further, we believe a technical sell-down to the 7,660 area would be a healthy rebound area,” Felix said.

Commenting on last week’s trading performance, Felix said the market has a muted reaction to the strong second quarter economic performance.

This, he said, meant that investors already priced in the result in the prior weeks.

Thus, foreign sellers continue to dump their holdings.

“Our index has seen six straight days of net foreign selling, with the past five days cumulatively showing P2.8 billion in net foreign selling. The Federal Reserve’s hawkish June meeting minutes may have been the reason for this bearishness, as investors may be expecting a September to December Fed rate hike,” he said.

Felix said investors would be keeping a close watch on US June data to including unemployment claims and preliminary second quarter GDP data, as well as Fed chairperson Janet Yellen’s speech this coming Friday.

These factors, he said, could provide a clearer picture whether the Fed would raise rates next month.

Analysts at 2TradeAsia.com echoed the same view, saying that investors would indeed look at the series of economic data from the US next week.

 “A series of economic data will be released in the US, specifically to gauge the health in consumer appetite for housing, set against the backdrop of cheap mortgage rates. While views on the timing for a Fed rate hike remains divided, the general perception is that ‘caution’ will continue to be a tall order, in light of the upcoming US polls and Brexit consideration, aside from rising trend in crude futures,” 2TradeAsia.com said in a commentary.

2TradeAsia.com said economic growth for the rest of the year would depend on the Duterte administration’s success in accelerating fiscal spending.

“This economic plan will be the carrying theme for the final semester of the year, despite volatility within the local and regional geopolitical terrain,” it said. 

Last week, the index closed at 7,930.75, down 25.11 points or 0.32 percent from the previous closing rate.