Local stocks seen trading sideways this week

MANILA, Philippines — The local stock market is expected to trade sideways this week with immediate support seen at 6,900 and resistance at 7,200, according to online stock portal 2TradeAsia.com.

The PSEi declined by 28 points or .40 percent week on week to close at 6,991 percent last Friday. After a three day-winning streak at the start of the week, profit taking prevailed ahead of the Bangko Sentral ng Pilipinas’ rate-setting meeting last Thursday and the Lunar New Year.

Average value turnover, however, slightly improved, rising by 24.05 percent to P12.36 billion. Foreigners turned buyers with average net foreign buying at P110 million last week.

2TradeAsia said a number of fiscal measures would encourage more investors to participate in the market. These include the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill and the Bayanihan 3.

“With the CREATE bill only pending President Duterte’s signature, hopes are up for significant reporting adjustments within the next few quarters as firms retroactively account for the five percent tax rate reprieve the bill entails,” 2TradeAsia said.

The Bayanihan 3, which has been filed in Congress, aims to allocate P420 billion for COVID-19 response.

“Passage of Bayanihan 3 will obviously spur government spending at least by mid-year 2021, which should provide more economic confidence for the second half of 2021, given highly anemic spending in 2020,” 2TradeAsia said.

Market participants are likewise keeping a close watch on earnings reports which are expected to trickle in.