PHILIPPINE shares are likely to enter a 200-point consolidation between 7,400 and 7,600 for the PSEi as August, the “ghost month,” comes into play particularly among Chinese investors who believe in bad luck.
The earnings play for the second quarter is also expected to influence the market, as well as the absence of further leads on the US interest rate hike and a weak Chinese market.
Political risk is also a factor being considered by foreign fund managers who have been sidelined by expectations of volatile trading ahead of the May 2016 elections, said Jason Escartin, investment analyst at F. Yap Securities.
Net foreign selling totaled P7.9 billion in July, which adds up to an accumulated foreign selling of P40.1 billion since April, he added.
In the year-to-date, foreign investors are still ahead in terms of buys even though somewhat lower at P8.7 billion Escartin noted.
AB Capital Securities Inc., on the other hand, noted that foreign funds continued to exit the Philippine market as indicated by an increase in foreign selling of shares last week to a total of P3.15 billion from P1.8 billion a week earlier.
“As mentioned before, we don’t see the index retracing to 8,000 in the short term until this trend reverses,” AB Capital said.
In its weekly market review, BPI Asset Management noted the first round of second quarter earnings were below expectations placed a drag on the market last week, a situation that may happen again this week.
“We expect Chinese government’s reaction to the recent Chinese equities rout and US economic data releases, including the manufacturing PMI [purchasing managers index]and non-farm payrolls, to be the main drivers of movements in the local equity market in the upcoming week,” it added.