PSEi may retest 8,500 on portfolio rebalancing

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LOCAL EQUITIES may breach the 8,500 mark this week as investors rebalance their portfolios ahead of the holidays.

The benchmark Philippine Stock Exchange index (PSEi) finished 1.46% lower or 124.02 points to 8,337.04 on Friday, but was up week on week by 32 points or 0.40%.

The financials sector lifted the index as it rose 2.7%, while industrials added 1% last week. Foreigners were net sellers last week, although slimmer at P40 million against the P340 million in the week prior. Gainers outpaced losers, 98 to 82.

“While year-end portfolio rebalancing and/or realignment continues, particularly among foreign investors, it is possible for the PSEi to make another attempt to move above the 8,500 level again or even challenge the intraday record high of 8,605.15 before the year is over,” PCCI Securities Brokers Corp. Research Head Joseph James F. Lago said in an e-mail last week.

The PSEi recorded a total of 12 fresh highs this year, with the latest being its 8,523.07 close last Nov. 6.

Timson Securities, Inc. equity trader Jervin S. de Celis said in a separate message that the index would have to keep its support within the 8,200 level.

“A retest of the 8,500 to 8,600 is highly likely due to window dressing before yearend. We just have to watch out for the key support level of the PSEi at 8,200. As long as it holds, the PSEi’s YTD (year-to-date) performance will end better than last year’s performance,” Mr. De Celis said in a mobile phone message last week. 

Online brokerage 2TradeAsia.com noted that investors will be looking out for listed firms’ announcement of their capital expenditure (capex) plans for 2018, as this would indicate whether they would be bullish next year.

“The market still has its second wish list left before the Yuletide holiday and that’s higher capex, wider business. Calls of whether or not to be bullish on the capex side would be taken on per sector call, as listed companies fine-tune their business models and market approaches, anchored on consumers’ behavior pattern,” 2TradeAsia.com said in a weekly market note.

The first package of the Tax Reform for Acceleration and Inclusion (TRAIN) bill, which is now just awaiting the president’s signature after its ratification last Wednesday, would push demand for more products and services in 2018.

The TRAIN bill raised taxes on petroleum products, while keeping to a minimum the increases in LPG, diesel, and gasoline taxes.

“While the structure entails pass-on costs, it would be up to consumers to adjust their spending practices based on the merits of the approved increase,” the online brokerage said, adding that there would however be a sensitive play on excise taxes on coal and oil products.

Analysts pegged immediate support within 8,270 to 8,300 range, while resistance is between 8,460 and 8,520. — Arra B. Francia

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