PSEi to test 8,000 mark this week

The ghost month has started, a traditionally spooked period for equities, but there’s no stopping market investors from trying to retest the 8,000 mark, analysts said.

Jonathan Ravelas, chief market strategist at BDO, said last week’s close at 7,958.57 continues to highlight that the market still has momentum to try the 8,100 to 8,150 levels.

“Immediate support and resistance is seen at 7,850 and 8,100 levels, respectively,” he said.

Astro del Castillo, managing director at First Grade Finance Inc. said investors should not be afraid of the the ghost month and should instead use the time to accumulate shares.

“It’s a time when people should go back to the market and accumulate,” he said.

Last week, the market barometer Philippine Stock Exchange index fell 0.70 percent week-on-week to 7,958.57 on profit-taking after the market failed to sustain itself above the 8,000 levels.

Ravelas said the market is waiting for fresh leads to sustain prices above the 8,000 levels.

Justino Calaycay of Philstocks Financials Inc. agreed that positive leads have dried up while negativity crept into investors’ consciousness.

“The PSEi flat-lined in the last two of a threesession week – rising 8.34 points Wednesday before ending Thursday with marginal gains of 1.84 points. These weren’t enough to offset the -66.75 points drop Tuesday that pulled the PSEi back under the 8,000-line where it spent seven of the preceding eight sessions,” he said.

He said for August, the index retreated -59.48 points (-0.7 percent), snapping five straight months of gains.

“Market breadth for the period was negative (-206), nearly one-and-a-half times wider than July’s -120. Market breadth dropped by an average of -4 per session last week with the spreads at -19, -10 and +17 respectively,” he noted.

As for foreign funds flow, he said, these have remained positive for August, averaging just a hair under P120 million per session.

“This is the fifth consecutive month foreigners have purchased more than they liquidated and brings their accumulated year-to-date position to P24.483 billion yet this year. However, this is just about half of the total net foreign purchases over the same 165 sessions last year,” he said.

This developed as the Philippine Stock Exchange said the PSEi would not see any changes in its composition based on the review covering the trading period from July 2016 to June 2017.

The six sectoral indices, on the other hand, will have changes in its constituents.

The financials index will see the inclusion of Medco Holdings Inc. and the exclusion of Philippine Business Bank while the Industrial index will have two new members, namely Cemex Holdings Philippines Inc. and Pilipinas Shell Petroleum Corp., while Da Vinci Capital Holdings Inc. will be removed from the index. Meantime ATN Holdings Inc. and Lodestar Investment Holdings Corp. will replace Filinvest Development Corp. and Prime Orion Philippines Inc. in the Holding Firms index.

For the property counter, Arthaland Corp., Crown Equities Inc., and MRC Allied Corp. will be added.

Changes in the services index consist of the inclusion of Apollo Global Capital Inc., Golden Haven Memorial Park Inc. and Harbor Star Shipping Services Inc. and the exclusion of DFNN Inc. and ISM Communications Corp.

On the other hand, three stocks will be removed from the mining and oil index, including Abra Mining and Industrial Corp., Atlas Consolidated Mining and Development Corp. and Manila Mining Corp.

PSE president and CEO Ramon Monzon said all listed issues were reviewed to see how they performed against the index criteria.

“The result we have is a reflection of how the listed companies fared during the review period. Those that qualified for index inclusion are the stocks that best represent our market indices,” he said.