Investors to hunt for cheap stocks this week

Market investors may again try to hunt for some cheap stocks in the first trading week of the third quarter, as seen in last week’s close at 7,193.68.

“This gives some room to try the 7,500 levels in the near-term,” said Jonathan Ravelas, market strategist at BDO.

However, he said the market remains vulnerable toward the 6,500 to 6,800 levels.

“Immediate support and resistance is seen at 7,000 and 7,500 levels, respectively,” he said.

First Metro Investment Corp. sees the Philippine Stock exchange index (PSEi) continuing with its consolidation.

But it noted there are some good counters to pick up for the rebound.

Over all, it said foreign investors are still in the selling mode, but this is already slowing down.

“A breakout above 8,000 should mark the end of this phase,” FMIC said.

Market barometer index rose 1.85 percent week-on-week for the first time in two weeks to 7,193.68 as investors took advantage of the cheaper valuation and the index falling below the 7,000 levels to accumulate stocks, causing some bargain hunting activities.

This comes after the recent low at 6,923.67 held on, Ravelas said.

Chris Mangun of Eagle Equities said there is strong indication that we will see a bottom soon and come to the end of this correction that we are currently experiencing.

“If the index can break resistance at 7,250 then we may see it fill the trading gap at 7,420 and possibly test the next resistance at 7,500,” he said.

The other scenario is that the index trades sideways between 7,000 and 7,200.

“Since the beginning of this bull run in 2009, the longest that the PSEi has closed in the red is five months in a row which we saw in the latter part of 2016. If history repeats itself, then we may see the index end July in the green,” Mangun added.

Meanwhile, the local currency likewise weakened last week by 0.11 percent week-on-week for the fourth straight week to 53.34 as the US dollar gained further against regional currencies like the Chinese Yuan and the Indonesian Rupiah. The peso hit a new 12-year low at 53.515.

“Chartwise, the week’s close at 53.34 highlights the strong dollar trend remains. Continue to expect the currency to range within the 53.30 to 53.65 levels in the near-term,” Ravelas said.

For the peso, immediate support and resistance is seen at 53 to 53.65 levels, respectively.