PSEi may gain ground this week

MANILA, Philippines — Share prices are expected  to climb this week on continued market optimism over vaccine rollout in the country, analysts said.

The Philippine Stock Exchange index (PSEi)’s immediate support is expected to hover from 6,780 to 6,810  given its behavior the past week,  according to Rizal Commercial Banking Corp. chief economist Michael Ricafort.

This level, he said, serves as a barrier versus further healthy downward correction in the near-term.

“First important support is the 6,600 level, where some bottom fishing or bargain hunting activities have taken place for more than a month already. After that, the immediate major support is at 6,400, which help keep intact the underlying upward trend over the past five months,” Ricafort said.

Meanwhile, the immediate major resistance is expected to settle from 6,920 to 6,970 level, which serve as an important gateway prior to further upside versus  potential retest of the 7,159.11 level  recorded on Feb. 10.

Last week, the PSEi corrected higher week-on-week by 86.51 points or 1.3 percent after declining for three straight weeks.

Since the start of 2021, the PSEi  was still 3.6 percent lower than the end-2020 level of  7,139.71.

Moving forward, Ricafort said catalysts that would encourage more market participation include continued market optimism on the first COVID-19 vaccine arrivals in the country.

The continued vaccine rollout could help shore up confidence and spending in the economy and help reduce new COVID-19 cases that could, in turn, justify further re-opening of the economy.

At least 600,000 Sinovac doses arrived last month and  487,200 AstraZeneca doses arrived on March 5.

“More COVID-19 vaccine arrivals and rollouts in the Philippines could help justify further re-opening of the economy, especially the proposed MGCQ nationwide that could lead to some pick-up in economic activities and investment valuations,” Ricafort said.

Risk factors, meanwhile, include the recent increase in new local COVID-19 cases to four-month high and recent detection of new cases of the UK and South African coronavirus variants that are more contagious.