MANILA, Philippines — The stock market is expected to consolidate this week as it enters its last full trading week for the year.
Chris Mangun of AAA Securities said December has so far been good as the main index is currently up by 1.8 percent.
Mangun said the market could see the ongoing “minor rally” continuing this week as the general sentiment improves.
Foreign funds have been flowing out immensely in the last few weeks. However, with the strengthening of the local currency, and with stock prices being at multi-year lows, we may see them come back and take advantage of the current environment,” he said.
BDO Research said risk lies at the break below 7,700, which paves the wave for a test of the year’s low at 7,51.05 level, which could occur in the near-term.
Last week, the benchmark Philippine Stock Exchange index rallied for the second straight week, improving 0.97 percent week-on-week to 7,877.63 after Bangko Sentral ng Pilipinas Governor Benjamin Diokno said interest rate cuts may resume in 2020 with prospects of a 50-basis point reduction in the policy rates.
“A drop in policy rates helps lower cost of borrowing for companies. This helps lower cost of doing business. Property developers are the obvious beneficiary, this helped boost the PSEI higher,” BDO said.
Abroad, US and China have proven that an agreement is beneficial for everyone as they compromise on the “phase one” trade deal.
US President Trump announced that they would be working on a phase two deal right away instead of waiting until the end of the next election as previously stated.
“Investors may gain optimism that these countries can work together and spur global growth,” Mangun said.
On the local front, Mangun said the economy is expected to do extremely well in 2020, which bodes well for the market.