MANILA, Philippines — The Philippine Stock Exchange Composite index (PSEi) could see immediate major support level between 7,500 and 7,700 this week, according to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort.
“The immediate major support level is at the 7,500 to 7,700 levels, which have been consistently the lower part of the trading range in recent weeks and months, especially since the start of 2019,” Ricafort said.
The immediate resistance levels, he said, are at the 8,000 to 8,200 levels, which have been the upper part of the trading range in recent months, especially since the start of 2019.
“Thus, the PSEi has been confined in the said trading range since the start of 2019, without any sustained breakout on either end of the said trading range,” Ricafort said.
Last week, the PSEi posted declines for the third straight week, giving up another 1.1 percent to close at 7,738.96.
Ricafort said this was partly due to the MSCI adjustments and rebalancing recently. This reflected some net foreign selling in the past two to three weeks.
“This somewhat defied the positive external factors recently, especially the new record highs in the US stock markets over the past month amid the possibility of a partial/phase one trade deal between the US and China,” he said.
US and China for instance signalled that they have reached consensus on some parts of the partial or phase one deal.
Ricafort said there were other factors that dragged the market.
These include slower growth in the latest government spending data and the decline in the latest infrastructure spending in October 2019 after the dramatic growth posted in both overall government spending and infrastructure spending in September 2019.
But Ricafort said an offsetting positive factor last week was the latest signal from Bangko Sentral ng Pilipinas Governor Ben Diokno about a possible cut in policy rates.