MANILA, Philippines — Share prices are expected to test the 8,600 level this week as market investors welcomed Congress’ move to ratify the Tax Reform for Acceleration and Inclusion (TRAIN), the Duterte administration’s tax reform package.
Although the final version may fall short of the estimated target to generate P130 billion in revenues, investors still welcomed the passage of the new measure which would still in the end raise money for the government’s massive infrastructure program.
This indeed would help the Duterte administration achieve its target of ushering in the so-called golden age of infrastructure by raising state spending on infrastructure to seven percent of economic output from five percent previously.
The approved tax package also called for an increase in the take-home pay of workers but also hiked taxes on fuel, vehicles and sugar-sweetened beverages while expanding the value-added tax (VAT) base.
Jonathan Ravelas, market strategist at BDO, said the market may reach 8,600 level this week.
“Chartwise, the week’s close at 8,337.04 highlights the market still has some gas to try the 8,500 levels. Immediate support and resistance is seen at 8,150 and 8,600 levels, respectively,” he said.
The market barometer PSEi rose 0.39 percent week-on-week to close at 8,337.04 after Congress passed the TRAIN and the 2018 national budget ahead of its Christmas break.
“Investors took it positively and pushed the market higher to as high as 8,461.06 in the early part of the trading week before it succumbed to some profit-taking towards the end of the session,” he said.
F Yap. Securities, meanwhile, said the “sensitive play” impact of the TRAIN would be on excise taxes on coal and oil, given its direct impact on electricity and transport prices.
This would now depend on listed firms’ hedging strategies to ensure margins are maintained and disruptions in demand are minimized.