Market to rebound this week

MANILA, Philippines - Share prices are expected to rebound this week, analysts said.

“Since we’ve spotted no technical divergences, we see last week’s correction as healthy and important in establishing a stronger trend this week,” Luis Limlingan, managing director of Regina Capital said.

A “range trade” strategy is raised as we forecast the index to continue trading within a consolidation range at least for the next one to three weeks until key levels are breached, he said.

Limlingan said investors should look for issues holding near key support levels as those are more likely to bounce back first once the index recovers.

“On the other hand, we recommend taking profits on issues trading near overbought levels as follow up corrections could be expected,” he said. 

The benchmark Philippine Stock Exchange index (PSEi) lost 102 points at 7,134, down 1.41 percent week-on-week. This even as average turnover improved by 19 percent to P6.8 billion.

Jason Escartin of F. Yap Securities said investors are expected to keep a close watch on China and whether markets are finally content with the People’s Bank of China’s surprise move to reduce its benchmark borrowing and lending rate by 25 basis points last Oct. 23.

He said China’s manufacturing data would be released early this week, as the country struggles to meet its seven percent gross domestic product (GDP) growth target.

“The market is presently divided whether more stimulus measures will be made, especially after the Bank of Japan (BoJ) refrained from enforcing new measures to boost its economy,” Escartin also said.

In the US, market volatility is expected to prevail as latest US employment data is released following the Fed’s relatively hawkish stance last week. 

“Expansion in labor numbers might reinforce views for a rate hike this December and vice-versa. Also, political analysts are keeping a close watch on preparations for US Congressional leaders’ debate on Dec. 11 covering an extension of the US government’s debt ceiling, lest face risks of possible shutdown,” Escartin said.