Window dressing expected for H1 results

MANILA, Philippines — Profit takers reigned in the stock market last week on continued jitters of more rate hikes from the US Federal Reserve, shrugging off the Bangko Sentral ng Pilipinas (BSP) status quo on its benchmark rates.

As such, the benchmark Philippine Stock Exchange Composite index dropped by 114 points to 6,393, down 1.76 percent week on week. As a result, average turnover declined to P4.58 billion, down by 76.06 percent year-on-year while foreign net selling returned at P165 million on average, compared to P1.39 billion net buying last week.

Against this backdrop, stock portal 2TradeAsia sees immediate support at 6,350, with resistance at 6,500 for the index this week.

“There should be some short-term reprieve for local risk assets in general as inflation drivers continue to stabilize.Additional dry powder come July may prod aggressive quarterly window dressing next week – brace for accompanying volatility. Second quarter earnings reporting season peeking over the horizon may further justify positioning at scale, given extra liquidity in the market,” it said.

The Philippine central bank has reiterated that rate cuts should not be expected anytime soon, with the governor opining that there must be at least two consecutive months of below four percent  inflation before talks of rate cuts are considered even as the Fed hinted that rate hikes are not out of the picture just yet, 2TradeAsia said.

Juan Paolo Colet, managing director at China Bank Capital Corp., for his part sees the local index at a critical juncture near 6,400 and “needs to rally above that hurdle to prevent further declines to the 6,300 to 6,350 support zone.

He said the shortened trading week – with June 28 declared a non-working holiday in observance of the Feast of the Sacrifice – will be driven largely by window dressing activity and technical trading as the first half of the year draws to a close.

“Investors will also start looking to position for the next half of the year as they assess the outlook for inflation and interest rates, and whether central bankers can ensure a soft economic landing against a backdrop of the most hawkish Philippine and US monetary policy in decades,” he said.