‘Improved sentiment to help PSEi in Q3’

IMPROVING investor sentiment here and the United States would help the Philippine Stock Exchange index (PSEi) return to the bull territory in the third quarter, according to First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P).

In the June issue of their “Market Call” report, FMIC and UA&P said the expansion in local economic activity and America’s continued improvement “significantly improved” investors’ sentiment.

This would likely bring the main index back to bull territory by the third quarter, they added.

“The risk, albeit not huge, would be a strong second wave in Covid-19 (coronavirus disease 2019) infections and deaths,” they said.

According to FMIC and UA&P, the reopening of advanced economies, led by the US, in May pushed global equity markets to including PSEi.

The index saw a 2.4- percent improvement in May to finish at 5,838.34 from 5,700.71 at the end of April.

“Global stock markets continued their rebound off the March lows, with investors looking toward increased monetary and fiscal stimulus, as well as the gradual reopening of economies amid the coronavirus pandemic,” the report said.

The PSEi and the Dow Jones Industrial Average, it added, recorded a lesser significant correlation at +0.02 in May from +0.4 the month before, as the latter’s recovery proved more robust. rally,

FMIC and UA&P also said five of the six local sectors were in the negative territory. The exception, the holdings sector, jumped 7.3 percent; mining and oil suffered the biggest loss at 7.3 percent.

The services, financial, property and industrial sectors registered minor drops of 0.8 percent, 1 percent, 1.7 percent and 2.2 percent, respectively.

The coronavirus pandemic also affected the market’s turnover as it slipped 6.2 percent in May.

Foreign selling also hounded local shares for the fifth straight month as net outflows hit P8.4 billion. This figure, however, was 51.1 percent lower than April’s P17.1 billion.