Having just breached the 8,100-point level, the benchmark Philippine Stock Exchange index (PSEi) is seen likely to trade sideways with a positive bias this week, with sustained foreign fund inflows underpinning the market.
Noting the index’s gradual ascent to a record close of 8,127.48 points on Friday, BPI Asset Management sees the market trading next within the 8,050 to 8,200 range, supported by the inflow of foreign funds.
BPI Asset was citing foreign funds seeking higher returns elsewhere than the US markets pending a clearer timing on the expected Fed move to raise key rates.
It is widely expected that that some of the foreign funds will find their way into the Philippines in the meantime.
“We expect the local equities market to trade sideways within the range of 8,050 and 8,200. Foreign fund flows are expected to push the index to record levels,” BPI Asset Management said in its weekly market review.
“Externally, US inflation and industrial manufacturing data is expected to come out [on Friday and Tuesday, respectively]. Any disappointment on this data will [fuel]further speculation of a delayed lift-off [in policy rates]; hence, will keep strong foreign flows,” it said.
“On the local front, OFW remittances for the month of February will be released, which if [the figures show]surprise on the upside, will also influence the market to rally. Conglomerates are seen attracting special attention as they are the closest proxies to the economy,” it added.
The PSEi on Friday rose 0.93 percent or 74.79 points to close at 8,127.48, marking the 27th time this year it set an all-time closing high, and for the first time, above the 8,100 level.
“Next target: having breached 8,100, the PSEi’s next target is 8,200. Key global incentives would come from M&A [mergers and acquisitions]stories, plus the highly-capitalized stocks’ expansion overseas,” Jason Escartin, investment analyst at online brokerage firm 2TradeAsia.com, said.
“Meanwhile, swings at the forex [foreign exchange]mart will be trailed, especially for local listed firms that have significant exposure to the US dollar, either via debt or topline,” he said.
Escartin expects immediate support at 8,050 to 8,100 points, and resistance at 8,200 to 8,250 points.
Justino Calaycay Jr. of Accord Capital Equities Corp. warned, however, the market now looks prone to a short-term correction despite having the bulls recently beating the bears.
“Behind the scene, talk on the vulnerability of the market is gaining decibel. The bears have found an audience but the bulls have managed to shoot down most of the arguments. Yet even as the market has, in the recent weeks, eked out fresh all-time records in a sudden surge to and briefly past the 8,000-mark— at one point crossing over the 8100-level to an all-time intraday record high of 8,136.97— the sources of [that]“fear” have not been invalidated. In fact, they could have even more strengthened,” Calaycay said.
The intraday record high remains intact at 8,136.97 after it was hit on April 7, Friday. The All Shares index lost 0.55 percent or 25.28 points to end at 4,635.38.
“Everyone is in agreement that a correction is bound to happen — if not a reversal. But the real question that has not found a satisfactory answer — or even hints of one — is ‘when?’” he added.