Exec: Market behavior hints local bourse to trade below 8,000-mark

Local investors may expect the Philippine stock market trading below the 8,000-mark through the year's end, an investment executive said.

"With the way the market has been behaving and the anticipation that there might be at least one hike in interest rate in the US, it's not highly likely the market will go back to 8,000 level again [for the rest of the year], but most likely next year," Gabriel U. Lim, senior vice president of BDO Capital and Investment Corp., told The FREEMAN in a recent interview.

Lim explained the dip recently in the stock market has been largely driven by the "re-positioning" of foreign funds out of the market over worries of an interest rate hike by the US Federal Reserve.

Lim said that hot money — the term for currency that moves regularly between financial markets — usually go where interest rates are high and bring the best returns.

He projected that foreign selling may still continue.

"It appears they (foreign funds) start re-positioning out of the peso back into the US dollar and that's in relation to as the US economy gains strength there's an anticipation there might be an increase in interest rate," the BDO Capital official said.

"If you have observed the stock market in the last several weeks, it was trying to seek directions," he said.

Last week, the Philippine Stock Exchange index fell again on strong net foreign selling on profit taking amid valuation concerns as the Philippines remained as the most expensive market in Southeast Asia, BPI Asset Management said in a weekly review.

The fall was also tracked on local funds reallocating funds ahead of the PSEi rebalancing effective today, where Security Bank Corp. replaces casino operator Bloombery Resorts as member of the 30-member PSEi.

PSEi closed at 7,581.79 points last Friday.

He said the PSEi is seen trading at a range from 7,6007,800 in the coming weeks.

The PSEi last posted a weekly gain last Aug. 5 when it closed at 7,970.35 points.

Looking from the longterm perspective, Lim believed the local equities market will find its "equilibrium" level given the strong domestic economy and good performance of local corporations.

He said the market will recover considering the robust economy.

He also mentioned of the Duterte administration's economic plans such as the tax reform package and the implementation of more infrastructure projects which are expected to add more optimism on the Philippine market.