Stocks expected to sustain positive momentum

MANILA, Philippines — Rosy expectations continue to prevail for the local stock market in the coming days, supported by monetary policy stances locally and abroad.

Despite closing in the red last Friday, the benchmark Philippine Stock Exchange Index (PSEi) was able to hold its ground above the 7,400 level at 7,428.30, up by 2.43 percent week-on-week.

Unicapital head of research Wendy Estacio-Cruz said the index experienced a healthy pullback after its recent rally.

“Nevertheless, we believe the momentum remains strong, given that average value turnover for the month is at P10 billion, way higher than the past months,” Estacio-Cruz said.

“We are currently looking at fresh catalysts locally, such as the Philippine inflation and unemployment rates that are to be released on October 4 and 8, respectively. These will indicate how much more rate cuts will the Bangko Sentral ng Pilipinas (BSP) implement for the remainder of the year,” she said.

Last Thursday, the PSEi closed at 7,458.74, its highest finish in 31 months or since closing at 7,502.48 on Feb. 9, 2022.

Philstocks Financial research manager Japhet Tantiangco said the market is currently up by more than 20 percent from its bottom last June 21, 2024.

Tantiangco said value turnover has been building up recently while net foreign fund inflows have been continuous.

“So far, the signs are showing that we are already in a bull market,” he said.

Tantiangco said that while episodes of profit taking may be seen this week as the market is technically overbought as per its relative strength index, the general direction of the bourse is still projected to be upwards.

“Optimism toward the dovish monetary policy stances both here and abroad are expected to help in sustaining the market’s movement. Investors may also digest the BSP’s latest confidence surveys which showed that both consumers and businesses are optimistic toward the next quarter and next 12 months,” he said.

In a report, 2TradeAsia.com said that the additional liquidity from the reserve requirements ratio plus policy rate cuts should help fuel the PSEi’s ambition to get past the 7,500 mark.

It said that while there is historical selling pressure around the benchmark’s current trading range, “the yield curve steepening and dis-inverting should support more consistent inflows as the appeal for bills and short term income securities evaporate relative to riskier assets.”

The market’s support is seen at 7,100 to 7,400, while resistance is at 7,500 to 7,700.