MANILA, Philippines — The start of the Chinese ghost festival this week is expected to further thin out trading volume for the next few weeks, traders said.
As the “ghost month” starts on Aug. 16, the market is expected to “hyper-fixate” on the Bangko Sentral ng Pilipinas’ meeting on Aug. 17, according to 2TradeAsia. This, as funds look for stronger direction amid the divergence between economic deceleration versus neutral-to-positive corporate earnings plus valuations.
It sees immediate support at 6,350, with resistance at 6,600 to 6,700.
Last week, market selling persisted after the release of disappointing Philippine economic growth numbers at 4.3 percent for the second quarter. Thus, the benchmark Philippine Stock Exchange index (PSEi) dropped by 44 points to 6,405, down 0.70 percent week-on-week. Value turnover also declined to an average of P3.74 billion while net foreign selling returned with an average of P183 million compared to P2.6 billion net buying last week.
“Disappointing second quarter gross domestic product (GDP) gave bears more reason to sell this market, as the 4.3 percent was much slower than expected – it was still below the consensus estimate floor of five percent and significantly off the six percent average, coming from first quarter’s 6.4 percent. While the government final consumption expenditure, which declined 7.1 percent, was anticipated in the absence of election related spending during the comparative period, quarter-on-quarter weakness of 0.9 percent may be prognostic of more pains ahead, at least when looking at growth from a macro perspective,“ 2TradeAsia said.