Inflation in focus as index to retest 7,000

MANILA, Philippines — The economy and a little politics could well put COVID worries in the backseat for the meantime as investors are likely to keep tabs on inflation and election filings this week.

In a report, stock portal 2TradeAsia said investors would be keeping a close watch on inflation and the Bangko Sentral ng Pilipinas’ monetary stance.

“The BSP’s inflation forecast for September at 4.8 to 5.6 percent confirms our past concerns on overheating prices. For one, while we do not expect any near-term change in policy stance, the higher print challenges the BSP’s room to stay dovish,” it said.

2TradeAsia said possible margin squeeze would be another concern, especially as industries that cannot fully pass on costs already have supply chain issues due to remaining lockdowns.

“In both cases, we also have to underscore the demand-pull impact coming from the holiday and election seasons. In this case, inflation hedges and by extension, interest rate risk hedges may go thematic in the upcoming quarters.”

It said the September inflation data to be released tomorrow and the deadline in candidacy filings for the 2022 national elections should provide some volatility this week.

2TradeAsia said this would give the benchmark Philippine Stock Exchange index (PSEi) the impetus to retest the 7,000 limit again.

The immediate support is 6,800 and resistance is seen at 7,000 to 7,100, the online research portal said.

“As the index once again retests the upper limit that is 7,000, check for issues that can break out of stasis in the expected flurry of economic momentum in the fourth quarter 2021 and first quarter of 2022,” 2TradeAsia said.

Overall, the local equities remained locked just below the 7,000 as lack of stronger catalysts kept the market in a seesaw between bulls and bears, it added.

The PSEi slipped 27 points or 0.40 percent week-on-week to 6,923.60.

Value turnover improved to P12.88 billion on average, mostly due to the listing of Andrew Tan’s MREIT Inc.