PSEi carries positive momentum

MANILA, Philippines — Share prices may recover this week with next support level seen at 7,350, analysts said.

 Last week saw the index on a six-day losing streak, which it managed to snap out of.

 “The next support comes in at 7,350. The bottom line is that the market is mo-ving away from relying on foreign funds. The market may take a little longer to climb as it absorbs all this foreign selling but eventually it will stop. Most of the opportunities this year are in second-liners and speculative issues which will continue until end of the year or until we see the blue-chips start to perform better,” said Chris Mangun of Eagle Equities Inc.

 Last week, most global markets including most Asian markets were up on optimism that there will be a possible round of trade talks between the US and China.

However, the Philippines bucked the regional uptrend.

 “The PSEi ended the week down another 185.49 points or 2.44 percent. Heavy foreign fund outflows were one of the causes for the decline with net selling at P33.52 billion which is way above the average,” Mangun said. 

The weakening of the peso against the dollar also added to the problem as it hit the 54 to $1 level last week, the last time it did this was back in 2005.  “This gives the foreigners a better incentive to convert back into dollars. It is quite disappointing that the index broke below the key support level at 7,500. The double-top chart pattern on the daily chart is also quite concerning. It is mainly because investors were not willing to buy blue-chips,” Mangun said.

Among the blue chips, only Ayala-led Globe was up more than three percent last week.

Of the 30 blue chips, 23 of them ended lower with Aboitiz Equity and JG Summit down more than nine percent.

In all, Mangun said the main index is down for a second week in a row because of heavy foreign selling.

 “Foreign funds have walked away from our market because of the continued caution on emerging markets which we are. However, local investors have picked up the slack supporting issues and preventing a total bloodbath,” he said.

Moving forward, he said there is strong indication that the index will end in the green next week. The next support comes in at 7,350 as the market moves away from relying on foreign funds.

But the market may take a little longer to climb as it absorbs all the foreign selling.