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Shares seen sideways as foreign outflows persist

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PHOTO BY SANTIAGO JOSE J. ARNAIZ

By Arra B. Francia, Reporter

THE MAIN INDEX is expected to continue trading sideways in the week ahead, amid concerns on the selling mode seen among foreign investors.

The Philippine Stock Exchange index (PSEi) jumped 1.77% or 133.09 points to finish at 7,630.26 on Friday, recovering after sinking to a one-year trough on Wednesday.

On a weekly basis, the market ended with a 0.23% decrease, with average daily turnover climbing 59% to P8.33 billion. The mining and oil sector rose 2.03%, against services which was sold down by 2.67%. Decliners prevailed for the week at 110, versus 84 gainers.

Villar-led Starmalls, Inc. was the week’s top gainer, climbing 8.4%, following speculation that the company will be used for the family’s entry as the country’s third telco player.

“Local equities were dragged to an intra-week low of 7,461, as international concerns took center stage. The US imposed tariffs on steel and aluminum, Italy’s political turmoil created uncertainty on the euro zone’s stability, while crude futures went for a spin,” online brokerage 2TradeAsia.com said in a weekly market note.

The online brokerage said while liquidity is present following the Treasury’s award of P66 billion worth of three-year retail bonds, there is continued concern on foreign selling.

“Talks have always centered on net foreign selling — an issue that does not consider the country’s long-term merits. Unless the unloading issue abates, risk appetite will also be tested with upcoming offers this month,” 2TradeAsia.com said.

There are currently two initial public offerings lined up this month: Del Monte Philippines, Inc.’s P17.6-billion issuance and D.M. Wenceslao & Associates, Inc.’s P15.6-billion offering.

Rizal Commercial Banking Corp. will also conduct a P15-billion stock rights offering.

Eagle Equities, Inc. Research Head Christopher John Mangun noted that foreign investors have so far sold around P48 billion worth of Philippine equities, compared to P56 billion in purchases last year.

“This is an indication that the market is bottoming out, that the market can’t go any lower if there aren’t investors willing to sell it down. The best-case scenario is for the index to continue in this congestion area and hold the 7,500 support level,” Mr. Mangun said in a market report.

Mr. Mangun noted 7,500 remains to be a strong support for the main index.

“The 7,500 support level has continued to prove as very strong support both technically and psychologically. Despite all the negative factors in the market right now both locally and abroad, the index still held 7,500. Based on the current market sentiment, the index will continue to trade within this congestion area between 7,500 and 7,830,” he said.

Meanwhile, 2TradeAsia.com placed the market’s immediate support from 7,500 to 7,550, while resistance is from 7,750 to 7,800.