PSEi may stay weak on profit-taking, global risks

By Alexandria Grace C. Magno, Reporter

PHILIPPINE STOCKS may remain under pressure this week as investors lock in gains from the market’s recent rally amid lingering geopolitical tensions, inflation concerns and domestic political noise.

Selective bargain-hunting in heavyweight stocks and resilient earnings from some listed companies helped the market end slightly higher last week despite cautious sentiment, online brokerage 2TradeAsia.com said.

“The PSEi managed a slim 15-point gain as selective bargain-hunting in index heavyweights and pockets of earnings resilience offset cautious sentiment from mixed corporate results, global uncertainty and lingering geopolitical risks,” it said in a note.

The Philippine Stock Exchange index (PSEi) shed 0.63% or 38.26 points on Friday to close at 5,976.77, while the broader all-share index dropped 0.65% or 22.16 points to 3,371.41.

Week on week the benchmark index still posted a modest gain of 15.8 points.

Japhet Louis O. Tantiangco, research manager at Philstocks Financial, Inc., said investor confidence remained weak despite the market’s gains over the past two weeks.

“The local market has shown positive momentum in the past two weeks amid bargain-hunting with support from foreign funds,” he said in a Viber message. “However, overall trading was tepid, reflecting weak investor confidence amid macroeconomic and political concerns.”

Mr. Tantiangco said the market could retreat this week as investors take profits while concerns over inflation and the Iran war continue to weigh on sentiment.

“The Middle East conflict has been ongoing for more than one-and-a-half months already with no deal in sight,” he said.

He noted that elevated oil prices could continue to fuel inflation concerns and keep investors cautious, especially as Brent crude remains near the $100-per-barrel level.

Mr. Tantiangco also said the peso’s continued weakness against the dollar might add to inflation risks and dampen foreign investor appetite for Philippine assets.

“The peso has gone back below the 61-per-dollar level. The local currency’s weak position poses upside risks to the Philippines’ inflation rate,” he said.

He added that political tensions in the Senate could distract attention from economic issues and hurt market sentiment.

“With the market seen to have a bearish bias, investors are advised to maintain caution with their trades,” he said.

Mr. Tantiangco noted that the PSEi has yet to sustain a move above the 6,000 level despite recent gains, showing that the level remains a strong resistance area.

He placed immediate support at the 10-day exponential moving average, with major support seen at 5,800.

2TradeAsia.com placed immediate resistance at 6,050 and secondary resistance at 6,300.