The Philippine Stock Exchange index (PSEi) is poised for further gains in the near future, although investors are advised to exercise caution as it approaches a crucial resistance level.
According to Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., the market is likely to test the multimonth resistance at 6,750, following last week’s bullish consolidation and net foreign buying.
Recent data from the stock exchange showed that the PSEi increased by 1.24 percent to close at 6,647.56 at the end of the previous week.
While net foreign buying reached about P980 million last week, net selling since the start of the year still remains at around P21.9 billion.
The breakthrough of the resistance level depends on this week’s major news flows, particularly the US Federal Reserve’s policy rate announcement. Colet believes that if the Fed indicates a shift to less hawkishness, it could trigger a long-awaited breakout rally.
Investors are also closely watching President Marcos’ State of the Nation Address (Sona) today, July 24, for insights into the government’s plans to address high inflation.
Aris Dacanay, HSCB economist for Asean, stated that investors are keen to hear about reforms in the military and uniformed personnel pension system, which could alleviate pressure on government expenditures.
Dacanay also emphasized the importance of liberalization and investment policies in the livestock, onion, and sugar sectors, as these could lower inflation expectations by boosting food supply and tempering overall food prices.
—Miguel R. Camus INQ
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