Share prices may continue uptrend this week

MANILA, Philippines – Investor optimism on President Duterte’s visit to China may continue to perk up the market this week, analysts said.

President Duterte went on a state visit to China last week with a 400-strong business delegation of mostly Filipino-Chinese businessmen. The President’s trip to China yielded $24 billion worth of loans and investment pledges.

BDO Capital president Ed Francisco said there was a lot of investor optimism in the market last week because of the gains from Duterte’s China trip.

BDO chief market strategist Jonathan Ravelas shared the same view.

“Local share prices rose 3.53 percent week-on-week, breaking a three week losing streak to 7,650.22 on optimism of the third quarter corporate earning reports as well as on the positive impact of potential investments coming in as a result of the President’s China visit which spurred the market to rally to the week’s high of 7,721.57 earlier this week,” Ravelas said.

He said the week’s close at 7,650.22 confirms that the near-term bottom was in place at 7,312.18.

Ravelas said the market would continue to see the range between the 7,500 and 7,800 levels.

“A break above the 7,850 levels could call the bulls back to play,” he said.

On the other hand, Luis Limlingan, managing director at Regina Capital said the Philippine Stock Exchange index (PSEi) may face corrective pressure this week.

“We expect the PSEi to face corrective pressure this week as the 50-day moving average proved to be an area of strong resistance. Prices are likely to form support between 7,580 and 7,500 in an attempt to establish a higher low base - given the index’s weak medium-term trend trajectory along with soft technical momentum, we need this pattern to prompt at least a consolidation, if not an uptrend,” Limlingan said.

He advised investors to take a cautious approach coming into this week’s trading as volatility remains to be our top concern.

“We anticipate sharp price movements with slight bias on the downside since no strong buy signals have been spotted yet. Issues with stable support bases with no negative technical divergence are good buys this week, while we suggest avoiding issues trading in a downtrend or near resistance as they contain the most corrective risk,” Limlingan said.

Last week, the market soared back to the 7,700 level on the back of prevailing market optimism but this was short live after investors decided to take profits.