Stocks to rise ahead of inflation data, BSP meet
THE MAIN INDEX is expected to continue rising in the week ahead with chances of a pullback, as investors look forward to a busy week ahead with the release of second-quarter earnings reports, July inflation data and a policy meeting by Bangko Sentral ng Pilipinas (BSP).
The bellwether Philippine Stock Exchange index (PSEi) gained 0.77% or 59.84 points to close at 7,819.39 on Friday, ending the week up 1.53%. The index was lifted by the mining and oil sector which increased 5.4%, holding firms that went up 3.9% and services that gained 1.4% for the week.
Average turnover jumped 4.08% to P6.1 billion on a weekly basis, alongside a net foreign buying that reached P1.06 billion.
For the week ahead, analysts expect the PSEi to continue its upswing.
“We don’t want to see the market go up too far too fast as this can reverse and cause a big swing to the downside. However, the market will do what it wants to do. Based on the technicals, we may see the index continue to surpass resistances,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
The Philippine Statistics Authority is set to release inflation data for July on Tuesday. The BSP sees the average rise in prices of widely used goods to have settled within the 5.1%-5.8% range. Should it hit the high end of this range, year-to-date inflation would reach 4.53%, way beyond the government’s 2-4% target.
The BSP will likewise hold its policy meeting on Thursday, where economists are predicting as much as a 50-basis-point hike as the regulator seeks to temper inflation.
The central bank already raised interest rates by 25 basis points each during its policy meetings last May and June amid accelerating inflation.
“Players would weigh the chances for adjustment in local interest rates, to narrow-down the differential with the US Fed’s anticipated rate hike in 4Q. Regardless of the move, the market will heed for clues if economic momentum is still strong to warrant an upward adjustment in rates, & aid in tempering the peso’s weakness,” 2TradeAsia. com said in a weekly market note.
A number of listed firms will also be reporting their second-quarter earnings this week, including Ayala Land, Inc., 8990 Holdings, Inc., Robinsons Land Corp., Megaworld Corp., Filinvest Land, Inc., SM Investments Corp., San Miguel Corp., Puregold Price Club, San Miguel Food and Beverage, Inc., Alliance Global Group, Inc., Globe Telecom, Inc., and PLDT, Inc.
These firms comprise 38% of the PSEi-member basket, according to 2TradeAsia.com.
Eagle Equities’ Mr. Mangun placed the main index’s support from 7,650 to 7,530, while resistance is at 7,880 to 7,960.
“We will continue to see investors flood in to blue chips that were laggards last year. Watch out for the Aboitiz companies and the Gokongwei companies,” Mr. Mangun said.