Main index seen pushing higher this week

ANALYSTS see the local market trying to push higher this week after ending the month of June up by 6 percent.

Research from AAA Equities said the main index was up by 17 percent for the second quarter but was 18-percent down from the beginning of the year.

“That being said, we go into the second half of the year with renewed optimism, as economic macro fundamentals remain strong,” it noted.

The bellwether Philippine Stock Exchange Index (PSEi) finished marginally up at 6,372.66, a 0.14- percent or an 8.58- point improvement last Friday, on the back of the recent “better-thanexpected” US jobs report.

Given its performance last trading week, AAA Equities said the local bourse might continue to go higher and test its next resistance at 6,600.

“A successful breakout above this resistance level by the end of the week will signal an even stronger move higher in the coming weeks. Failure to pierce this level will signal investors to sell, which will send it lower to test support. It will all depend on investor’s perception of the economic recovery,” the research explained.

It added that a pick-up in trading volumes would indicate that the market would move higher.

“Increased mobility will speed up the economic recovery. With more public transportation, companies will be able to operate at a higher capacity as more workers can return to work,” AAA Equities said.

Regina Capital Development Corp. Managing Director Luis

Limlingan also sees the market pushing towards the 6,600 to 6,800 levels.

Limlingan said this could happen if pandemic cases would not escalate, inflation stays manageable, foreign buying continues and no sudden negative macro external shocks would come out this week.

Philstocks Financial Inc. research associate Piper Chaucer Tan, on the other hand, said the market would trade sideways or be in a “consolidation phase,” where investors are in a “wait-and-see” mode as PSEi moves within the range of 6,100 to 6,500 levels.

Tan added that economic calendars for the week might have a slight effect on the market, particularly June inflation and balance of trade.

“But I think what concerns investors is the second quarter earnings, which we think is one of the reasons investors are banking right now on the (optimistic) side, keeping the index above (the) 6,000 level,” he said.

Meanwhile, Tan said that in terms of market participation, they see a significant increase in value fund flow from the 20-day moving average of 6 billion during the enhanced community quarantine to 8 billion currently.

“This could be signaling that funds are [slowly] going back to equities but on the hindsight, the risk of Covid-19 (coronavirus disease 2019), uncertainties in the government policies here and abroad and the US market still challenge the index to push higher and eventually break the 6,700 strong resistance,” he continued.

Tan has set PSEi’s range from 6,120 to 6,400 this week.