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Stocks to retest 7,000 level
Online stock portal 2TradeAsia said immediate support for the 30-company benchmark Philippine Stock Exchange index is seen at 6,800, while resistance is at 7,000 to 7,050.
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Stocks to retest 7,000 level

Iris Gonzales (The Philippine Star) - June 21, 2021 - 12:00am

MANILA, Philippines — Traders expect share prices to hover within a broad range this week as lingering concerns over the US Federal Reserve’s perceived actions weigh down positive developments on the local front, particularly in the vaccine rollout program.

Online stock portal 2TradeAsia said immediate support for the 30-company benchmark Philippine Stock Exchange index (PSEi) is seen at 6,800, while resistance is at 7,000 to 7,050.

“The PSEi may have eased on the gas pedal, so to speak, but the overall trend remains positive, unshaken by the Fed’s looming hawkish stance. After all, local fundamentals are more critical versus global speculation,” 2TradeAsia said.

Investors are seeing positive signs with vaccinations ramping up and the public offered perks both by the public and private sector just to take their jabs.

Last week, after flirting at the 7,000 level mid-session, the local bourse took a breather as optimism was doused by the US Federal Reserve’s possible tightening by 2023, much earlier than its initial target of 2024, 2Trade Asia said.

Investors are still recalibrating their moves following the Fed’s signal that it may raise short-term interest rates twice by late 2023. The Fed also began talks about slowing its bond-buying program that’s helping to keep longer-term rates low.

For the week, the PSEi dropped 56 points or 0.82 percent to 6,851.38.

Average value turnover, however, improved to P9.81 billion, up 63.32 percent as foreigners turned net sellers with an average value of P630 million from the P170 million net buying last week.

Moving forward, 2TradeAsia said fundamentals for the second half of the year are looking up, “primed by the government’s move to shift Metro Manila and some areas of the National Capital Region Plus under general community quarantine with restrictions.”

While this scheme only offers slight relaxations, it allows certain types of businesses to reopen.

These include museums, gyms and improved provisions for outdoor tourism venues and restaurants.

“These are foot traffic traps – they increase mobility and help supply chains achieve faster turnover of goods. If this trend continues for the rest of NCR Plus, a possible consumer spending and by extension, gross domestic product, upward re-rating may be warranted within the next quarter, which in turn should push equity valuations higher,” 2TradeAsia said.

This, it said, would encourage more investors to go back to the market.

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