Bearish trades seen this week

MANILA, Philippines — The local stock market is expected to continue moving with a bearish bias this week amid concerns on inflation.

The Philippine Stock Exchange index (PSEi) was able to rebound and close in positive territory last Friday at 5,825.97. Still, it was down by 0.51 percent week-on-week.

Unicapital Securities head of research Wendy Estacio-Cruz said the market snapped a five-session losing streak last Friday as bargain hunting drove a relief rally.

She said the peso also recovered, although lingering economic and geopolitical concerns kept investors cautious.

“In our view, for recovery to be sustainable, clear signs of improving growth prospects and easing geopolitical risks are needed,” Estacio-Cruz said.

“We believe the market is now looking forward to the release of September inflation data in the next two weeks, which could provide clearer direction for monetary policy expectations,” she said.

First Metro Investment Corp. head of research Cristina Ulang, for her part, expects the PSEi to continue trading sideways to flat early this week, capped by quick profit taking on rallies.

“Market path is uncertain ahead of the September Philippine inflation data likely showing still elevated inflation,” she said.

Chartwise, Philstocks Financial research manager Japhet Tantiangco said the market’s current support is seen at 5,800, while resistance is at 6,000.

This week, he said the market may test 5,800 further.

“The local market continues to move with a negative bias, hitting a new low for the year at 5,730.02 last week,” Tantiangco said.

On the macroeconomic front, Tantiangco said inflation remains a central concern amid high oil prices, weak local currency and rising inflation expectations.

“While current levels are considered bargains, and fundamentals remain intact, the bearish case remains strong as other markets move unfavorably against local equities, while overall macroeconomic conditions remain discouraging,” he said.

2TradeAsia.com said eyes are on Bangko Sentral ng Pilipinas’ September inflation outlook this week, while GCash’s final pricing on Oct. 1 for its initial public offering will also be awaited.