PH SHARES WEEKLY OUTLOOK

Window-dressing may support PSEi

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But China slowdown, US rate hike, still factors at play
After dropping to the 6,900-point level last week, local equities may enjoy some buying support this week on the back of window-dressing by companies on their end-of-the-quarter finances.

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“Prospective quarter-end window-dressing might come into play, as fund managers reposition for fourth-quarter opportunities,” Jason Escartin, investment analyst at F. Yap Securities Inc., said in a weekly market outlook.

Remittances from Filipinos overseas toward and around the Christmas season are also seen providing additional boost to the market.

Escartin also cited the latest credit rating upgrade on the Philippines by Fitch as an attractive factor for investors to reconsider the country’s strong current account surplus, anchored on proceeds from the BPO [business process outsourcing]industry.

Based on the latest available data, the first-quarter current account surplus stood at $3.3 billion, equivalent to 4.8 percent of GDP, up from 2.3 percent previously.

A factor on the downside to consider, however, is that investors are likely to be mindful of the developments in China’s economy, as well as the next raft of US economic data that could warrant a Federal Reserve move to raise its key interest rates.

The “possibilities for the PSEi [Philippine Stock Exchange index] to revert to above the 7,000 line will highlight debates this week, although a technical pattern for MACD [Moving Average Convergence Divergence], & RSIs [Relative Strength Index] do not lend strong positive reversals just as yet … Continue to trade modest windows. The immediate support is at 6,850 to 6,900, while resistance is at 7,000 to 7,100 points,” Escartin added.

Luis Limlingan, managing director at Regina Capital Development Corp., said the benchmark stock index is expected to continue testing support at 6,860 points this week “as it tries to establish consolidation to keep prices from falling back to monthly lows.”

“We should see a bounce-back to 7,100 upon a successful hold. Otherwise, expect corrections to 6,600 at maximum. Volatility remains a concern due to a week-on-week increase in 14-day average true range, suggesting sharper intraday movements,” Limlingan said.

“We advise to hold off any buying until we see a support bounce to confirm the index’s reaction low — a range-trade strategy will be raised if 6,860 holds. Issues trading above 200- and 260-day MAs [moving averages]are still good buys, provided there are no technical divergences,” he added.

BPI Asset Management said in a weekly market review that Philippine equities are in seen in a downward bias this week — to trade between 6,700 and 6,900 — on the back of volatility caused by developments in US and China.

“For the coming week, we expect local markets to track movements overseas given the lack of economic data releases domestically. [US Federal Reserve Chair Janet] Yellen’s speech later during the week could affect local markets early next week,” BPI Asset Management said.

“Furthermore, anticipation of the US September non-farm payroll print and unemployment rate could also cause investors to position ahead of the releases,” it added.

On Thursday, the bellwether PSEi fell 0.14 percent or 9.36 points to 6,917.55, while the wider All Shares index dipped 0.10 percent or 4.01 points to 3,991.08. Friday trade was suspended in observance of the Feast of Sacrifice or Eidul Adha.

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