Philippine Market Seen Trading Sideways With Downward Bias Amid Peso Volatility

MANILA, Philippines — Trading may move sideways with a downward bias at the local market this week as peso volatility is expected to persist, analysts said. The Philippine Stock Exchange index (PSEi) capped off last week with back-to-back wins, finishing at 6,090.60 last Friday, or 2.25 percent higher week-on-week. Philstocks Financial research manager Japhet Tantiangco said the local market managed to get back above the 6,000 level last week on the back of bargain hunting. However, he said overall investor confidence remains low as reflected on the tepid value turnover. Last week’s four-day trading week saw participation narrow by 40 percent to P25.3 billion, while net foreign selling thinned to P1.35 billion from P7 billion the previous week. “The economic outlook remains challenged. The chart remains bearish. Signs show that in the near term, the local market could still move with a downward bias,” Tantiangco said. He sees the market’s current trading range at between 6,000 and 6,150. First Metro Investment Corp. head of research Cristina Ulang, for her part, said the PSEi is likely to be in narrow range trading between 5,900 and 6,100 due to the weak peso. “But any dovish (US) Fed policy, say a steady hand on its next meeting on Sept. 15, would be peso supportive and thus a catalyst for PSEi recovery,” Ulang said. 2TradeAsia.com said another volatile week should be expected for the peso-dollar exchange, with dollar demand seen rising to support inventory front-loading ahead of the Yuletide season. “Continued peso-US dollar volatility will stay, with higher chances for the Fed to consider raising interest rates at its mid-September meeting. Prefer stocks with solid forex hedging strategies,” 2TradeAsia.com said. “On rates, we would not chase the ‘inflation is over’ narrative as the real test of disinflation is deeper into the fourth quarter. Note that the end of the Ghost Month festival nearly coincides with the Fed’s meeting mid-month; stay liquid ahead of Fed-related mind games,” it said.