Philippine Market Outlook Sept 10, 2018

MARKET OUTLOOK

Sentiment at the local market may still be dampened over last week’s report of a faster-than-expected inflation rate and could take a breather following last week’s battering, with investors likely to be seeking news on how the government will address the country’s economic woes while being on the lookout for optimistic prospects here and abroad.

The Philippine Stock Exchange index (PSEi) is expected to hover between 7,600 to 7,700 this week following a three-day slump that saw a return to 7,500 territory.

Last week’s disappointing factors to continue weighing on the market’s mood. Movements might be limited within this zone for now, until significant positive catalysts arise.

These may come from win-win arrangement on trade spats, approval of sequel on corporate income tax cut via the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO). Choices meanwhile, might be limited on inflation hedge picks, defensives, and those with sequel stories to unlock for the remainder this year.

TRABAHO is a substitute bill to the second package of the government’s tax reform program.

The index may continue to go sideways as it builds momentum to test 8,000 before the end of the month.

Support hovers between 7,400 and 7,500 and resistance between 7,700 and 7,750. June’s foreign direct investments and July’s trade balance data — to be released today and Tuesday, respectively — are some of the local economic data which may test either support or resistance this week.

Friday’s decline, however, was lesser in magnitude, hinting that at the very least, the market has finished digesting the inflation news and may consolidate in the absence of fresh leads.

If the market breaks below 7,500, the next support will be at 7,200.