SHARES WEEKLY OUTLOOK
TRADING is likely to remain subdued for the rest of August on the Philippine Stock Exchange, before picking up pace in the run up to the Yuletide season, in line with global and regional trends, according to online brokerage 2TradeAsia.com.
Global markets are expected to take the cue from the not so subtle hints of Federal Reserve Chair Janet Yellen on Friday that the US is ripe for an interest rate increase, 2TradeAsia said in a weekly note.
Yellen said the case of raising US interest rates “has strengthened” in the recent months on the back of the improvements in the labor market and expectations of moderate growth for the US economy.
Foreign investors have shunned riskier assets in line with the portfolio rebalancing last week, said RCBC Securities Inc.’s Anton Alfonso.
“The local barometer played within the range of 7,900 to 8,000 until it headed into the 7,800 territory last Wednesday, with foreign investors going into risk-off mode just before Janet Yellen’s speech,” Alfonso said.
“Whether or not markets get a clearer view of the Fed’s next rate hike, hopefully, investors will be decisive with the onset of September and the end of the so called ‘ghost month’,” he added.
2TradeAsia is betting the market will trade flat with a negative slant this week before a rebound in September.
“Whether or not a rate hike is upheld by the Federal Open Market Committee (FOMC), the overall reading among institutional investors is for rates to remain subdued, with or without a consensus 15-25 basis points (bps) tightening …
“We believe a neutral stance or rate hike possibility has already been factored into share prices, with emphasis shifting to trends in investment and consumer spending,” 2TradeAsia noted.
An improvement in turnover will likely happen when the negative sentiment associated with the ghost month evaporates after Aug. 31, and the seasonally positive “ber” months begin, the brokerage noted.
Traditionally, the market gets a boost during September, October, November and December due to a ramp up in consumer spending for the Yuletide season.
“Key highlight would be on the pace of fiscal spending, including the specifics of the Duterte administration’s economic growth agenda,” it added.
The focus would likely revert to consumer staples and infra bets such as property and construction, 2TradeAsia noted.
On Friday, the bellwether PSEi decreased by 0.12 percent or 9.05 points to 7,845.49, while the wider All Shares dipped by 0.05 percent or 2.18 points to 4,661.61.
Financial markets are closed today for the National Heroes Day.