PSEi to take another crack at 7,300-pt level

The local benchmark index will take another crack at the 7,300 mark this week as investors await the release of the Philippine economy’s third quarter performance.

Analysts said anticipation to the country’s third quarter gross domestic product (GDP) would likely dictate equity prices in the coming days leading to Thursday’s official economic data release.

Multilateral institutions and several foreign banks have earlier forecasted third quarter economic growth to be at the low end of the government’s 6.5- to 7.5-percent target.

“The release of third quarter Philippine GDP is expected this week. Results that could slow third quarter GDP might be attributed to bottlenecks encountered in major ports, although investors might be more considerate since delays have already been addressed,” said Jason T. Escartin, investment analyst at F. Yap Securities.

Escartin placed immediate support at 7,200 to 7,250, while resistance is at 7,300 to 7,350.

“We maintain our buy-on-weakness strategy, albeit on gradual basis. Aggregate returns outweigh risks for Philippine equities, as the present low borrowing cost regime will entice more aggressive capex rollout plus merger and acquisition angles,” he said.

On Friday, the Philippine Stock Exchange index (PSEi) managed to end on a positive note behind upbeat foreign leads at 7,276.18, 59 points or 0.82 percent higher week-on-week.

Market breadth also broke free from a 14-day losing streak as advancers finally topped decliners by the week’s close.

“The main index, despite wild swings that preceded the last two week’s relative tepidity, continue to trade within and close to historic highs. The same can be said of the sub-indexes,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

Calaycay, however, showed concerns over the local bourse’s thinning value turnover in the past weeks.

“The degree of activity as measured by the investment flow slowed in October and, unless it starts to pick up in the coming week, is poised to be even slower this November,” he said.

Calaycay said initial upside target for the PSEi this week is to break past the 7,300 mark.

“From that point on, dependable records are quite thin,” he added.