Bargain hunting, cautious trading in play
Cautious trading is expected to persist in the local stock market this week, but episodes of bargain hunting could lift the bourse up after last week’s sharp sell-off.
Manila, Philippines — This week is predicted to see cautious trading in the local stock market, with brief periods of bargain hunting potentially boosting the bourse following a sharp sell-off last week. The benchmark Philippine Stock Exchange index dropped to 5,855.91 last Friday, declining 3.40 percent week-on-week. Online brokerage 2TradeAsia.com attributes the market's volatility to fluctuations in global crude prices, which are heightening concerns over potential increases in consumer prices.
Investors are also closely monitoring the peso's volatility and the high import bill. The brokerage predicts that sentiment will remain uncertain due to developments in Saudi Arabia's crude supply and local political issues surrounding an impeachment verdict. The US Federal Reserve recently raised its benchmark interest rates by 25 basis points to curb inflation, and this move may prompt the Bangko Sentral ng Pilipinas (BSP) to follow suit, should the peso show significant volatility.
Philstocks Financial Inc. believes the recent Federal Reserve policy hike has increased the likelihood of a BSP rate hike. Both factors, elevated global oil prices and the weakening peso, continue to negatively impact the local market. In the coming weeks, 2TradeAsia.com warns that domestic liquidity absorption will likely be the primary driver of market movements.
They anticipate that Vitro REIT's approximately P24 billion IPO and the Mynt listing, the largest offering in PSE history at nearly P92 billion, will drain substantial investible funds from the secondary market, especially in early fourth quarter. While large-cap, index-heavy stocks are expected to perform better as the IPO pipeline empties, caution is advised when trading small-cap stocks until the IPO surge subsides. However, the PSEi is anticipated to aim for the 6,000 mark before the end of September.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
