Market awaits global, domestic developments

MANILA, Philippines — The whole week was red at the local bourse as the benchmark Philippine Stock Exchange index (PSEi) declined for the fifth straight day Friday, closing at its lowest level in over nine months.

The drop was largely due to external/exogenous factors beyond the country’s reasonable control, namely the continued hawkish US Federal Reserve signals, the Russia-Ukraine war that has dragged for more than two months, and some lockdowns that could slow down the economy of China, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

For the second week of May 2022, the PSEi declined by a heftier 380.73 points or 5.6 percent versus the previous week’s 0.4 percent slump.

Ricafort said he sees the next support level at 6,100 to 6,200 while immediate resistance is at 6,560 to 6,670.

Moving forward, he said the catalysts for the market include the stronger-than-expected first quarter economic growth of 8.3 percent year-on-year, which could help support or justify the possible local policy rate hike as signaled and reiterated as early as June 2022.

This, he said, could lead to some pickup in borrowing costs and financing costs for some listed companies.

Additional details on presumptive president Ferdinand Marcos Jr.’s economic team and members of his Cabinet in view of the transition would also help provide clarity to the market.

Outside the Philippines, investors will also be keeping a close watch on developments, such as the Russia-Ukraine conflict which has been ongoing for nearly three months already or since Feb. 24.

For her part, First Metro Investment Corp. head of research Cristina Ulang said there’s a prevailing risk-off sentiment, which is overshadowing the strong first quarter 2022 economic fundamentals.