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Index may fall below 6,000 level
On Friday, the PSEi declined for the fourth straight day by 25.75 points or 0.4 percent to close at 6,003.26, the lowest in more than one a half months or since June 2.
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Index may fall below 6,000 level

Iris Gonzales (The Philippine Star) - July 27, 2020 - 12:00am

MANILA, Philippines — The Philippine Stock Exchange index (PSEi) may fall below the 6,000 level this week, according to Rizal Commercial Banking Corp. chief economist Michael Ricafort.

“The next support is at 5,990 levels, which prevents any further healthy profit taking or downward correction over the near-term,” Ricafort said.

Major support over the past two months is at 5,850 levels, which help keeps the underlying upward trend intact at the moment, he said.

On Friday, the PSEi declined for the fourth straight day by 25.75 points or 0.4 percent to close at 6,003.26, the lowest in more than one a half months or since June 2.

But Ricafort said this was nonetheless still among the highest level in about four and a half months, or since March 12.

He attributed the drop to the recent spike in local COVID-19 cases, which could adversely affect recovery prospects for both the economy and corporate results of some listed companies.

Furthermore, he said new and upcoming bond and equity issuances could have sapped some funds in the financial system toward these new fund-raising activities and away from existing issues, thereby causing the recent bouts of healthy profit-taking and downward correction.

Week on week, the PSEi already declined for the straight week, down by 85.49 points or 1.4 percent.

In all, since the start of 2020, the PSEi already declined by a total of 1,812 points or 23.2 percent versus 7,815.26 as of end-2019.

“This may already reflect some market expectations of declines in net income results of some listed companies largely due to the COVID-19 lockdowns,” Ricafort said.

Major catalysts for the coming week include more fund-raising activities such as the continuation of the Retail Treasury Bond (RTB) offering and the country’s first-ever Real Estate Investment Trust (REIT) offering that could also attract some foreign buyers.

However, he said the trend in new COVID-19 cases locally and in some countries may still be offset or even overshadowed by any further positive developments on possible vaccines.

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