Stock market seen moving sideways this week

MANILA, Philippines — The benchmark Philippine Stock Exchange index (PSEi), the local stock market barometer, continued to be battered by net foreign selling for the 37th straight trading day as of end of last week. 

Traders said the index may move sideways this week, but they said it’s possible that some bargain hunting may push it upward. If third quarter earnings result come in strong, the index may start moving up again, traders said.

Jonathan Ravelas, chief market strategist at BDO said last week’s close at 7,151.52 highlights some room for some more uptick toward the 7,300 levels in the near-term. 

At the same time,  Ravelas said failure to clear the 7,300 levels could signal a retest of the 6,900 to 7,000 levels. 

Last week, market barometer PSEi rallied by 2.10 percent week-on-week for the first time in six weeks to 7,151.52 after local investor sentiment improved following a rebound in Wall Street early on during the trading week. 

Bargain hunting on selected index issues helped push the market index above the 7,000 levels. 

On Friday, the Bangko Sentral ng Pilipinas (BSP) reported that third quarter headline inflation was at 6.2 percent year-on-year. 

This is higher than the 4.8 percent average posted in the second quarter of the year, bringing the first nine months average to five percent. 

Gabriel Perez of Papa Securities said that market investors should keep a close watch on foreign selling. 

If foreign selling persists this week, the market may continue having difficulty going up.

“Despite the index closing in the green once again, note that the continued presence of foreign selling still remains to be an overhang for the market – watch out if this still persists (this) week. Keep an eye as well for how US markets perform tonight as they’ve had a hand in the overall sentiment this past week,” Perez said.

Christopher Mangun, head of research of Eagle Equities said that third quarter corporate results would also play a role in the market’s direction. 

“We will start to see third quarter corporate earnings reports come in. If we see earnings come in and it exceeds expectations, this may be the catalyst the market is waiting for to start going up again. The market can trade sideways and shuffle around the 7,000-level, or investors may come in and bargain hunt as there are several companies that have been taking a constant beating in the last few months,” he said.

But in all, he said the market still lacks catalysts.

“And with constant foreign selling, we aren’t going to see this market perform any better. With oil prices starting to go lower, the government may finally get inflation under control and may not have to rely on another rate hike,” Mangun said.

“The Philippine peso got stronger this week, coming below P54 despite analyst expectation of it getting weaker. The influx of overseas Filipino workers (OFW) remittances in the fourth quarter may strengthen the currency further and may calm yet another concern of investors,” he said.