PHL shares may climb on positive economic news

LOCAL SHARES are poised to firm up in the week head, as investors digest positive news on some economic indicators.

The benchmark Philippine Stock Exchange index (PSEi) jumped 1.88% or 130.75 points to close at 7,083.34 on Friday, bringing its gains to 114.52 points or 1.64% by the end of the week.

This came amid the main index’s fall to its lowest close this year at 6,843.83 on Tuesday. The recovery followed the Bangko Sentral ng Pilipinas’ decision to hike rates for the fourth consecutive session last week, for a cumulative 175-basis-point increase for this year alone.

Online brokerage 2TradeAsia. com said the rate hike should help reduce inflation concerns and also provide support for the peso’s recent strength.

“This is on top of the Palace’s move to suspend the scheduled excise tax increase on fuel for 2019, including approval of rice tariffication measure. The biggest headline was on crude prices, having fallen by as much as 26% from $76/barrel in early October this year, to $56/barrel,” 2TradeAsia.com said in a weekly market note.

The online brokerage said these factors should then induce consumer spending, “which would help cascade its effects on the economy through pumpprimed investment.”

For Eagle Equities, Inc. Research Head Christopher John Mangun, market participants may start positioning themselves for blue-chip stocks.

“Based on the increase in trading volume and the pickup in trading of blue chips, this market is positioning itself to start going up... We may see investors start to move in and pick up blue chips that are currently undervalued,” Mr. Mangun said in a weekly market report.

Value turnover last week stood at P38.28 billion, while foreign fund outflows reached P2.86 billion.

Mr. Mangun noted that more than half a dozen blue chips gained over five percent last week, prompting the PSEi to perform twice as well as the all-share index.

“With the taming of inflation and the appreciation of the peso, there is no doubt that investors will take notice and slowly start getting back into the market,” he added.

2TradeAsia.com, however, said there are still some challenges to be hurdled, such as when net foreign selling would stop.

Other leads to watch out for would be Chinese President Xi Jinping’s visit to the Philippines on Nov. 20 to 21, which could lead to potential investment deals.

“Market participants will be eager to see price actions on sectors likely to benefit from potential investment deals: infra, energy, property, telco, agri & mining,” 2TradeAsia.com said.

Eagle Equities’ Mr. Mangun placed the PSEi’s support from 6,800 to 7,000, while resistance could be from 7,200 to 7,500.