Index support firms up at 5,830

MANILA, Philippines — Share prices are expected to consolidate this week with immediate support  at 5,830 level, according to  analysts.

This level, they said, would help keep the underlying upward trend over the past four months intact.

“The 5,700 to 5,800 levels have been proven to be a strong support during the period of consolidation over the past one to two months, partly supported by the near record low local interest rates, mostly at one to two percent levels amid the continued excess liquidity in the financial system,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

Both these factors could still prompt the search for higher returns and support liquidity-driven shifts to some riskier assets such as equities, he said.

But in all, this would still depend on investors’ appetite for equities.

The Philippine Stock Exchange index ended slightly low or last week, declining for the fourth straight day by 7.24 points or 0.1 percent to close at 5,838.66.

Although at a three-week low, the  index is still at its highest in six months or since March 13, shortly before the COVID-19 lockdowns started.

“The PSEi corrected lower for the second straight week, by 70.24 points or 1.2 percent as this may still reflect continuation of the consolidation or base-building mode, or confined in a range of 5,700 to 6,100 levels over the past two months,” Ricafort said.

Thus, some bargain-hunting have been taking place toward the strong support nearing the 5,700 to 5,800 level over the past two months, while some healthy profit-taking has been encountered toward the 6,000 to 6,100 level.

Moving forward, the markets will also anticipate the upcoming monetary policy-setting meeting of the Bangko Sentral ng Pilipinas on Oct. 1,  Ricafort said.

Major upcoming local economic data include bank loans due on Sept. 30; domestic liquidity growth, also due on Sept. 30 and the Philippine Manufacturing Index set to be released on Oct. 1.