The Philippine Stock Exchange index (PSEi) may retest the all-time high of 7,400 points this week as investors look forward to the so-called Santa Claus rally toward the end of the year.
The Santa Claus rally is a rise in the price of stocks that typically occurs in the week between Christmas and New Year’s Day, usually driven by investor optimism and some window dressing activity.
BPI Asset Management said in its weekly market outlook that the PSEi is seen to trade “between 7,250 and 7,400” points this week and may retest the 7,400 level as the year-end approaches.
It noted that the key catalysts to watch out for are the November consumer price index (CPI) or inflation figures to be released on December 5, Friday, and the November unemployment rate and nonfarm payrolls data in the US.
For his part, Luis Limlingan, managing director of Regina Capital Development Corp., said: “For the first trading week of December, a hold is raised based on technical indicators until 7,360 is broken. Also, we advise keeping close watch on 20 days MA [moving average]because this is a crucial support base if the index wants to revisit 7,400.”
“With technical readings generally bullish, expect this week’s trend to show bullishness,” he added.
In case of a drop in the market’s 20-day MA, Limlingan said that the next key support is seen at 7,200, “but there’s a bigger possibility that the index will enter a consolidation.”
On the other hand, Justino Calaycay Jr. of Accord Capital Equities Corp. said that the market is in a positive light in the next few days as it immediately shook off the shock from the relatively poor third quarter gross domestic product (GDP) performance.
“Moving into December, most stocks may already be fully priced while discounting of full-year results begins three months down the line. Thus, the major impetus for the month will be anticipating a Santa Claus rally — particularly with the relatively short trading month ahead,” he said.
“November inflation numbers will be an interesting data in the first week — given the slower growth, the CPI [consumer price index]level should give an indication on the future policy action by the Bangko Sentral ng Pilipinas,” he added.
The government reported third-quarter GDP growth of 5.3 percent, its slowest pace in almost three years. This was lower than the 7 percent recorded in the third quarter last year and the 6.4 percent growth seen in the second quarter this year.
On Friday, the main PSEi was up 29.04 points or 0.40 percent at 7,294.38 thanks to bargain-hunting activity, which also lifted the All Shares index which rose 16.93 points or 0.40 percent to 4,296.90.