MANILA, Philippines — The Philippine stock market seesawed last week, which may then see the benchmark gauge hitting the immediate support level of 7,000 this week.
According to 2TradeAsia.com, the Philippine Stock Exchange Composite index (PSEi) is likely to hit the resistance range of 7,300 to 7,450 this week.
2TradeAsia, in a commentary sent over the weekend, said the PSEi currently trades at 18 times forward P/E.
“This begs the question: is a correction forthcoming? We reiterate that while corrections do not feel healthy when they form, they build the foundation for more sustainable rallies and more often than not, open up good accumulation windows for stocks with unlocked value,” it said.
Last week, the PSEi gained 111 points to 7,246, up 1.56 percent week-on-week.
All sector indices closed higher, with mining and oil, property and industrial leading the gainers.
Average value turnover also rose to P11.09 billion while average net foreign selling eased to P290 million, down 50.6 percent week-on-week. Gainers topped decliners, 130 to 106 on average, according to 2TradeAsia.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. sees the next resistance or target for the PSEi at 7,500 and then at 7,800.
“The immediate major support for the PSEi since the start of December 2020 is at 6,950 to 7,020 levels, which help keep the strong upward trend over the past two weeks intact for now,” he said.
After this, the next important support is at 6,600 to 6,700 levels, which Ricafort said “helps keep intact the latest strong upward momentum or impulse over the past two months.”
Ricafort said the market booked gains as investors anticipated the approval of the 2021 national budget by President Duterte on or before Christmas, at the earliest, after the approval by lawmakers on Dec. 9.
“As a result, the markets are also anticipating further progress on the CREATE Bill as early as within 2020,” he said.
Market investors are also keeping a close watch on external developments such as further progress on the COVID-19 vaccine. There have been positive developments on the vaccine front such as the approval by the US FDA of the Pfizer’s vaccine for emergency use.