PHILIPPINE SHARES may move sideways this week as investors stay cautious amid lingering geopolitical tensions and mixed domestic economic data, with slower-than-expected growth clouding the outlook.
On Friday, the Philippine Stock Exchange index (PSEi) rose by 0.2% or 12.40 points to close at 6,290.35, while the broader all shares index went up by 0.15% or 4.95 points to end at 3,418.40.
Week on week, the PSEi increased by 53.91 points from July 31’s finish of 6,236.44.
“Local equities managed to yield a small recovery, closing 54 points higher at 6,290. Mining and oil led sector winners on improved gold and copper prices, while services took its angle from ICT’s (International Container Terminal Services, Inc.) positive first-half earnings. On the contrary, property and financials went soft, as 6.2% July inflation supported views for further rate tightening from the Bangko Sentral ng Pilipinas (BSP),” F. Yap Securities, Inc. said in a market note.
“The local market managed to post gains in last week’s trading, snapping a two-week losing streak,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.
For this week, the mood may stay subdued due to both external and domestic concerns. “Sentiment is seen to remain cautious moving forward amid the latest developments between the US and Iran. Latest macroeconomic data, especially on GDP (gross domestic product), may also be a cause of concern for the market,” Mr. Tantiangco said.
“Recent macroeconomic data are giving mixed clues. The Philippines’ inflation rate last July, both headline and core, have posted slower figures, though still elevated. June employment figures, in real terms, have posted an increase both month on month and year on year. However, our second quarter GDP data has posted slower expansion, implying that the local economy continues to lose growth momentum,” he added.
Philippine GDP grew by 2.3% in the April-to-June period, significantly slower than 5.4% in the same quarter last year and the 2.8% growth in the first quarter. This brought growth for the first half to 2.6%, below the government’s 3.5%-4.5% full-year target.
Mr. Tantiangco added that technical indicators show that the PSEi is losing momentum. He said the index could trade from 6,150 to 6,400 this week.
For its part, F. Yap Securities said the market could begin taking positions before the BSP’s Aug. 27 policy meeting following mixed economic data.
“Set against this backdrop, there could be support for one more BSP rate hike in August, though softer growth argues for a shorter tightening cycle rather than a skipped hike,” it said. “Core inflation stickiness is the detail the BSP will weigh most heavily going into August… Our house call remains for another BSP rate hike in August, though growth concerns have shifted the balance more toward status quo.”
It added that the start of the Chinese “ghost month” on Aug. 13 could result in thinner volumes. — Alexandria Grace C. Magno
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