Index seen testing 6,400 on easing liquidity concerns

MANILA, Philippines - Easing liquidity concerns will likely push the local bellwether index to test the 6,400 level this week.

Positive indications of an extended easy money policy of the US Federal Reserve is seen to invite investors awash with cash to pick stocks, analysts said.

“With technical indicators at their oversold levels, the Philippine Stock Exchange index (PSEi) could make a comeback to 6,400 but external factors will still weigh, particularly the upcoming Federal Open Market Committee’s minutes,” said Abbygayle Estrella, equities analyst at AB Capital Securities Inc.

“Possibility for local gauges to revert to 6,400-6,500 is expected this week, as the financial system remains awash with cash for investing opportunities,” said online brokerage firm 2Trade-Asia.com.

For BPITrade.com director Richard Anthony Liboro, the outlook is generally positive “knowing that it will take longer than sooner for quantitative easing tapering to happen.”

Week-on-week, the benchmark PSEi barely changed, falling just 0.01 percent 8.78 points to 6,346.40 while the broader all-share index shed 0.26 percent or 10.02 points to end at 3,869.00.

It was marked by a 90-point loss on Monday given positive economic and jobs data in the US that bolsters that case for tapering, as well as investors’ concern on the impact of Super Typhoon Yolanda, said Jonathan Ravelas, chief market strategist of BDO Unibank Inc., said

But losses were tempered by bargain hunters at the end of the week while optimism picked up as Federal Reserve vice-chairman Janet Yellen stated that liquidity-enhancing stimulus program is still needed to address low employment rate.

“Seeing the bulls charge back as the index neared 6,200, and in fact wiping out 90 percent of the losses sustained at the lowest point Monday, invites a semblance of optimism,” said Justino Calaycay Jr., an analyst at Accord Capital Equities Corp.

For this week, opportunities for bargains are still present.

“Check for core stocks that have regressed to oversold region and trade a range,” 2Trade-Asia.com said, adding that immediate support is 6,300 and resistance is 6,400-6,450.

“We place the immediate support at 6,300 and resistance at 6,500,” Estrella said, adding that investors will focus on indications for the third quarter economic growth as the local earnings season closes.