Tight trading range seen this week

It still remains to be seen when the Philippine stock market will recover and resume its trend in early 2018.

The benchmark Philippine Stock Exchange index (PSEi), is set to trade within a tight range early this week as players return from their post-Easter break, according to 2TradeAsia.com

“For now, the PSEi will have to build a strong base above 8,000 to solidify expectations of possible run-up to its earlier trend. Immediate support is 7,900, resistance 8,100 and 8,200,” it said.

The market, it added, would be keeping a close watch on March inflation, which would help determine the direction of the index.

“At home, attention will revert to March inflation and possibilities from monetary authorities to consider adjusting their policy stance in the next meeting. It should be noted, however, there are other tools available, including reserve requirement adjustment. Meanwhile, investors will also watch for sequels to government’s second phase of tax reform (TRAIN), specifically on corporate income tax and the finance’s stance in the present and subsequent investment incentives. This crucial package must be balanced carefully to ensure continuity of long-term direct investments in the Philippines, especially for capital-intensive undertakings,” it said.

Last week, the PSEi finally closed in positive territory gaining 9.03 or 0.11 percent after three weeks of ending in red and trading P20.70 billion. This was despite only having three trading days.

All sectors closed higher or unchanged except for the holdings sector due to losses in SM, and the services sectors because of issues like ICTSI and PLDT being down.

“The excitement in speculative issues have died down, which may be an indication that investors are now looking at other opportunities in the market,” said Chris Mangun, head of research of Eagle Equities.

“To end the week up a little bit is very impressive despite the selloff we saw before the close on Friday. The index has held the 7,900 support area which, to me, may potentially be a bottom for this correction. If it continues to hold this area in the following week, this may signal investors that this is a good time to start buying into this market again after being on the sidelines for the last couple of months,” he said.

Thus, he said, recovery may already start happening in the coming weeks, moving into the second quarter.`