PHILIPPINE SHARES could move sideways this week ahead of July inflation data and other second-quarter corporate earnings reports.
The benchmark Philippine Stock Exchange (PSEi) index ended its three-day rally on Friday, down 63.33 points or 0.99% to close at 6,315.93, while the index broadest of all stocks fell 26.14 points or 0.76% to 3,398.82.
Still, week over week, the PSEi is up 52.54 points or 0.84% from its July 22 close of 6,263.39.
“The local market fell 0.99% on Friday to 6,315.93 as investors took profits on its previous three-day rally. Concerns about the negative fallout from the weakening US economy on the Philippine economy weighed on sentiment,” said Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial, Inc. in a Viber message.
“Ensuring the declarations of [Federal Reserve Chairman Jerome] Powell that the U.S. economy is not in recession guided local gauges to the positive side, as the latest second-quarter U.S. GDP (gross domestic product) data supported expectations of a less aggressive view on price increases. sequelae rate,” online brokerage 2TradeAsia.com said in a report.
For this week, Tantiangco said the market is likely to move sideways as investors await catalysts such as July inflation data on August 5, Friday.
“A slowdown from June’s 6.1% could boost positive sentiment, while further acceleration could lead to selling pressures on the local stock exchange,” Tantiangco said in a Viber message.
He added that investors should also take inspiration from the release of other corporate and foreign exchange earnings reports in the second quarter.
“The peso is now back above the 56P per dollar level, closing at 55.13P last week. If its appreciation continues, it could help boost optimism in the market,” Mr. Tantiangco added.
2TradeAsia.com said expectations of another rate hike at the Bangko Sentral ng Pilipinas meeting this month could also affect market sentiment.
“This would give enough breathing room for interest rate sensitive sectors, especially those targeting improved sales for the rest of the year (i.e. real estate stocks),” the brokerage said. line.
Philstocks Financial’s Mr Tantiangco’s trading could remain tepid at the start of the ‘ghost month’, a period of the lunar calendar when some Asian investors refrain from making big investments or big decisions, leading to lower trading transaction volumes. For this year, the period began on July 29 and will continue until August 26.
He placed immediate support for PSEi at its 10- and 20-day exponential moving averages of 6,282.48 and 6,292.59, respectively, and resistance at 6,350-6,400. Online brokerage 2TradeAsia.com put immediate support at 6,100-6,200 and resistance at 6,450-6,550.
RECOMPOSITION OF THE INDEX
Meanwhile, Semirara Mining and Power Corp. (SCC) will join the 30-member PSEi from August 8, replacing Security Bank Corp. (SECB), after the review of the PSE for 2021, the stock exchange operator announced on Friday.
This is the latest recomposition of the index with a free float requirement of at least 15%, with companies now needing a level of public ownership of 20% in order to be included in the PSEi during the next exam period.
The PSE also announced changes in the composition of sector indices: Rizal Commercial Banking Corp. will now be part of the financial index; Benguet Corp. will be under mining and petroleum; 8990 Holdings, Inc. and DDMP REIT, Inc. will be included in the real estate index; and Phinma Corp., Shakey’s Pizza Asia Ventures, Inc. and Synergy Grid & Development Phils., Inc. will be part of the industry index.
The 20-member PSE MidCap and Dividend Yield indices will also be revamped, SCC, Cebu Air, Inc., DoubleDragon Corp. and Filinvest Land, Inc. to be removed from the MidCap Index. They will be replaced by AyalaLand Logistics Holdings Corp., DDMP REIT, Inc. (DDMPR), SECB and UnionBank of the Philippines, Inc.
Robinsons Land Corp., Robinsons Retail Holdings, Inc., SECB and Universal Robina Corp. will also be removed from the Dividend Yield Index to be replaced by DDMPR, Filinvest REIT Corp., MREIT, Inc. and RL Commercial REIT, Inc. — JID table