Portfolio realignment expected this week

Portfolio realignment as a result of the quarter-end season would likely take center stage this week as fund managers prepare their refreshed basket weighting for the second semestral wave, analysts said.

Traders said it may be difficult to return to the 8,000 mark after last week’s steady decline but Justino Calaycay of Philstocks Financials said the benchmark Philippine Stock Exchange index (PSEi) is still trading higher than expected.

The fall of global crude benchmark to $42 per barrel last week did not help, sending jitters to markets worldwide. Last week, the PSEi fell 68 points to 7,814, down 0.9 percent week-on-week, dragged by property (-2.7 percent) and services (-2 percent).

2TradeAsia.com said some investors looked at the pending bill covering agriculture land conversion to ensure food security.

The weakening of the peso against the dollar also added to the negative sentiment.

The peso weakened to 50.38 to $1 from 49.90 to $1 previously, after the local central bank decided to maintain interest rates.

Average turnover fell to P7.4 billion, although net foreign buying was maintained, albeit slightly.

“As the market prepares to gather momentum for its next climb, a healthy checklist is essential, to test the resilience of monetary and fiscal policies, including the need to recalibrate, if necessary. Even as inflation outlook was adjusted to 3.1 percent, growth remains well supported, and value plays in equities are present,” 2Trade said in its outlook.

It would benefit investors to go for stocks with convincing growth stories that will support improved dividends in the long-term.

“Immediate support is 7,750, resistance 7,870-7,900,” 2Trade said.