• PH SHARES WEEKLY OUTLOOK

    A ‘make or break’ for PSEi on Q2 GDP

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    WITH sustained volatility in the global markets over the continuous decline of the yuan, it will be a “make or break” week for local shares, depending on how the Philippine economy did in the second quarter based on the gross domestic product (GDP) numbers to be released later this week.

    While the local market was still mostly driven by the devaluation of RMB and local corporate earnings, next week “. . . we expect the PSEi to trade between 7,150 and 7,325 with a downward bias,” BPI Asset Management said in a weekly review on Friday.

    “We expect the local GDP numbers to be the main driver of the market next week,” it added.

    The GDP results will be announced on Thursday, August 27.

    According to a Moody’s Analytics report last week, the second quarter GDP likely pick up on strong consumption and government spending.

    The Philippine output as measured by the GDP likely clocked in at 6.8 percent in April to June from 5.2 percent the first quarter and 6.4 percent in the second quarter of last year, according to a forecast by Moody’s.

    However, Luis Limlingan, managing director of Regina Capital Development Corp., noted the situation “will be a make or break scenario for the index” due to various technical indicators that place the likelihood of a breach in the major support levels.

    “While our range-trade recommendation is maintained, we advise keeping a close watch on the support [at the]7,272 to 7,239 points and wait for a strong bounce before entering any trade setup. Note that failure to hold both support levels will cause further corrective reactions to 7,100 to 6,950,” Limlingan said.

    “On the other hand, the only bullish condition would be a rally above 260-day moving average (MA) to invalidate the bearish setup and push prices back to re-challenge the 7,660 to 7,700 [range],” he added.

    For his part, Jason Escartin pointed out that there will be some bargain hunters in search of short-term opportunities. “However, the overall outlook remains hazy with the PSEi trading below its 200-day moving average.

    “Its 30-day MA has also broken below the 200-day MA, and the 100-day MA is on a downtrend. Net foreign buying has whittled down to P2.65 billion, with P46 billion of outflows done the past 6 months: P10 billion in April, P9.3 billion in May, P13 billion in June, P7.9 billion in July, and P6.1 billion in August.

    “Trade prudently. The immediate support level is at 7,200, and resistance is at 7,350 to 7,400 points,” he added. “This week, the local market was still mostly driven by the devaluation of RMB and local corporate earnings. Next week, we expect the PSEi to trade between 7,150 to 7,325 with a downward bias,” BPI Asset Management said in a weekly review on Friday.

    “We expect the local GDP numbers to be the main driver of the market next week,” it added.

    The second quarter Philippine GDP is slated to be announced on Thursday, August 27.

    According to a Moody’s Analytics report last week, second quarter GDP is seen to pick up as consumption strengthened and government infrastructure spending kept up during the April to June period.

    From the 5.2 percent GDP result in the first quarter and 6.4 percent in the second quarter last year, Moody’s projected that GDP will grow 6.8 percent this time around.

    Luis Limlingan, managing director of Regina Capital Development Corp., said that this week “will be a make or break scenario for the index” due to various technical indicators that spot the likelihood of the main index’s break of the major support level.

    “While our range trade recommendation is maintained, we advise keeping close watch on support [of]7,272 to 7,239 points and wait for a strong bounce before entering any trade setup. Note that failure to hold both support levels will cause further corrective reactions to 7,100 to 6,950,” Limlingan said.

    “On the other hand, the only bullish condition would be a rally above 260-day moving average to invalidate the bearish setup and push prices back to re-challenge 7,660 to 7,700,” he added.

    For his part, Jason Escartin pointed out that there will be some bargain hunters this week that are seeeking for opportunistic short term plays “however, the overall outlook remains hazy with the PSEi [Philippine Stock Exchange index] trading below its 200-day moving average (MA).

    “Its 30-day MA has also broken below the 200-day MA, and the 100-day MA is on a downtrend. Net foreign buying has whittled down to P2.65 billion, with P46 billion of outflows done the past 6 months: P10 billion in April; P9.3 billion in May; P13 billion in June; P7.9 billion in July and P6.1 billion in August. [Investors are advised to] trade prudently. The immediate support level is at 7,200, and resistance is at 7,350 to 7,400 points,” he added.

    On Friday, the bellwether PSEi dropped to 7,200 points as it incurred 0.90 percent or 65.75 points losses to 7,278.98, while the wider All Shares index deduced 30.46 points or 0.73 percent to 4,158.12.

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