MARKET OUTLOOK
Shares are expected to rise in the week ahead, taking cues from the positive finish in August and expectations for listed companies’ plans during last quarter of 2018.
Analysts are looking at a good start for the month of September, with expectations of the PSEi likely breaking the 8,000 resistance level soon.
Market players are starting September with a lot of confidence, certain that the index will break and stay above that 8,000 key level. Breaking above it will start a climb to the upside which may even take the market to its previous high of 9,000 before the end of the year.
Investors will likely come back to the market given the end of the Chinese ghost month on Sept. 9.
As the ghost month draws near its close, participants’ attention would be swayed to prospects in store for Q4, specifically telco, infra, energy, property/tourism and exploration. It would be timely to start reviewing sequels to other M&A angles, given the resonating call to align resources and expertise accordingly.
However, there is also the possibility the stock market could edge lower given expectations the government will report that inflation hit another five-year high last month.
The Philippine Statistics Authority (PSA) is scheduled to announce August inflation data this Wednesday and the consensus view points to a further rise from July’s 5.7%. A 6.0% and above result could stoke concerns that monetary authorities would again raise key interest rates after a total of 100 basis points since May.
Last Friday, the central bank said inflation could have settled “at around 5.9%” last month “with a range of 5.5% to 6.2%” due to higher food, fuel and power rates.
The central bank’s policymaking Monetary Board, which ordered 25-bps adjustments in May and June and followed these up with a 50-bps increase in July, will hold its next meeting on September 27.
Another round of interest rate hikes should be expected if August consumer price growth clocks in higher.
The PSEi’s immediate support at 7,800, with resistance from 7,950 to 8,000.
