The domestic stock market should benefit from foreign interest spurred by dismal US jobs data that suggests the US Federal Reserve may hold off raising its key interest rates, while a lack of major local corporate news may keep domestic players on the sidelines, analysts said over the weekend.
Victor Immanuel Felix, equity research analyst at AB Capital Securities Inc., said that the investing community would be tracking the US jobs data, which is a key indicator of whether the Fed would raise rates this month.
“The pas six trading days has seen net foreign buying, accumulating about P1.5 billion, a reversal from the previous week-and-a-half that saw P1.9 billion in foreign outflows. This suggests that foreign investors have regained confidence in our market amid Fed woes ahead of the next FOMC [Federal Open Market Committee] meeting,” Felix said.
US non-farm payrolls fell short of the consensus forecast, only adding 38,000 last month versus the expected 160,000.
The weaker jobs data would prompt investors to rethink the strength of the US economy to withstand Fed rate hike.
Thus, risky assets such as equities are likely to benefit should the Fed decide to hold its upward adjustment in rates until such time that the US economy shows clearer signs of getting stronger.
The benchmark Philippine Stock Exchange Index (PSEi) last week gained 1.38 percent week-on-week to close the five-day trading at 7,514.22.
“Clearly, the main driver was the big boost in the share prices of PLDT [TEL], and Globe [GLO] after acquiring the telco assets of San Miguel Corp. [SMC],” 2TradeAsia.com said in a note.
However, 2TradeAsia said that the lack of major local corporate news this week might convince players to stay on the sidelines.
“This is likely to result in a timely pause for the market, a much needed breather, in our view. Since May 9’s presidential election, the PSEi has surged nearly 7 percent and a respite appears forthcoming,” 2TradeAsia said.