PH stocks likely to rebound this week on bargain-hunting

Philippine stocks may recover this week on bargain-hunting following last week’s sharp decline.

Philstocks Financial Inc. research head Japhet Tantiangco said the market may retest the 7,400 to 7,500 range this week as investors could buy stocks that were heavily sold down last week.

“If it manages to come back to this area, then this will be considered as its support, while resistance would be at 7,700. If it fails, however, then this will be its resistance, while support would be at 7,150,” Tantiangco said.

Investors are also expected to focus on the Bangko Sentral ng Pilipinas’ (BSP) upcoming policy meeting.

Bank of the Philippine Islands (BPI) senior vice president and lead economist Emilio Neri Jr. said the BSP would likely opt for a modest 25-basis-point rate cut in its next policy meeting, rather than a more aggressive 50-bps reduction.

While inflation softened to 1.9 percent in September, Neri said there are several factors that warrant a more cautious approach.

He said recent economic activity prints and emerging growth prospects also suggest that aggressive monetary easing is not necessary.

The Philippine Stock Exchange index (PSEi) succumbed to profit-taking last week, after five straight weeks of rally. The PSEi lost 2.11 percent to close at 7,310.32 Friday, while the broader all-shares index dropped 0.66 percent to 4,015.16

The trading also declined in terms of value turnover, as foreigners turned net sellers in the past three trading days. Average daily value amounted to P6.33 billion.

Aside from rising tension in the Middle East, investor sentiment was also affected by movement of the local currency against the US dollar.

The local currency depreciated by 1.62 percent week-on-week to finish at P57.205 due to lack of fresh stimulus in China and expectations of modest US rate cuts.