Stocks still seen bearish this week

MANILA, Philippines — Bears continued to hound the local stock market, as seen in recent sessions and a shortened trading week could further dampen sentiment.

The benchmark Philippine Stock Exchange index (PSEi) dropped by 129 points to a near 10-month at 6,160.61, down by 2.06 percent week-on-week, in step with the decline in other regional markets as investors braced for the risk of a hawkish tilt from US Federal Reserve Chair Jerome Powell.

Value turnover, meanwhile, dropped to an average of P3.82 billion, down by 55.2 percent week-on-week. Net foreign selling was dominant as it widened to an average of P424 million, up by 229.31 percent week-on-week.

Unicapital Securities said the main index’s support level has dipped to 6,100 as the Bangko Sentral ng Pilipinas (BSP) now expects to miss the six to seven percent gross domestic product (GDP) growth target for this year.

This is due to moderating economic activity amid high interest rates and elevated inflation.

Despite this, however, Unicapital said even as the bleak sentiments persist and the recent developments are being priced in, investors should be hunting for some bargains.

2TradeAsia, for its part, see immediate support at 6,050, with resistance at 6,350 to 6,400.

“The upcoming shortened trading week can further sap already anemic participation. We strongly encourage looking at individual corporate stories while the broader market contemplates direction. The slide has made particular valuations only more appealing, especially relative to the downside risk of holding in the long-term,” it said.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said he sees immediate major resistance at the 6,420 to 6,480 levels as next major gateway prior to further upside potential toward a re-test of the immediate high of 6,698.41 posted on July 25, 2023.

The upcoming catalysts would be banks’ loan growth to be released on Aug. 31; domestic liquidity growth, also on Aug. 31 and the latest manufacturing data to be released on Sept. 1.

The BSP, meanwhile, is set to meet on Sept. 21 for its next policy rate-setting, which could match the next Fed rate decision on Sept. 20 in order to maintain healthy interest rate differentials, Ricafort said.