Trading to remain sideways

MANILA, Philippines — Local stocks are expected to continue trading sideways on the final week of October as investors are likely to tread with caution while waiting for fresh leads.

This week will see a shortened trading week plus end-of-month window dressing.

Despite ending on a positive note at 7,314.23 last Friday, the Philippine Stock Exchange index (PSEi) was down by 1.37 percent week-on-week.

Online brokerage firm 2TradeAsia.com said the impact of Severe Tropical Storm Kristine was partly to blame for the PSEi’s big dip last week.

“A pause from funds might be warranted as the full scale of Kristine’s impact has yet to be gauged, not to mention its possible reentry plus side-by-side with another cyclone intensifying over the weekend,” 2TradeAsia.com said.

“Absent other catalysts, this week’s month-end window dressing period might be an opening for traders to position and bet ahead of the US poll plus Fed cut week, especially given the timing on the earlier RRR (reserve requirement ratio) cut implementation that should further inject available cash flow for trading,” it said.

While the PSEi bounced back last Friday, Unicapital head of research Wendy Estacio-Cruz said value turnover remains low as investors are still concerned about the potential effects of the storm on inflation targets.

“In our view, last week’s correction is healthy after the index gained nearly 16 percent year-to-date. We now look ahead to the FOMC meeting on October 29 to 30, followed by fresh catalysts, such as the release of Philippine October inflation data and the US presidential elections on Nov. 5,” she said.

Market support is seen at 7,000, while resistance is at 7,500.

Trading is suspended on Friday in observance of All Saints’ Day.