Index may trade higher this week

MANILA, Philippines — Share prices may trade higher this week with the next support seen at the 5,600 to 5,700 level, according to analysts.

“The 5,600 to 5,700 level has been a strong support over the past month amid near record low of long-term local interest rates and government bond yields. The record low interest rates could still prompt the search for higher returns in riskier assets such as equities,” said Michael Ricafort of Rizal Commercial Banking Corp. (RCBC).

He said the near record low interest rates and still relatively large amounts of excess liquidity may  prompt investors to search for higher returns in riskier asset classes such as in the equities market amid the recent healthy profit-taking in the sovereign bond markets locally and in many countries around the world over the past two to three weeks.

Possible leads in the coming weeks, Ricafort said, include the P166 billion Bayanihan 2, now for signing into law by President Duterte any time soon, further progress on other reform measures such as the CREATE Bill that could immediately cut corporate income tax rate to 25 percent from the current 30 percent and other reform measures that may help improve economic recovery prospects.

Last week, the PSEi corrected slightly higher for the second straight day after declining for five straight days, rising by 12.23 points or 0.2 percent to close at 5,785.09, but still among one-month low.

“The recent downward correction at the PSEi has been largely brought about by relatively higher new COVID-19 cases that could potentially slow down the economic recovery prospects locally and could have adverse effects on the sales, net income, and valuations of some listed companies,” Ricafort said.

In all, the PSEi declined for the third straight week by 99.09 points or 1.7 percent.