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Stocks to dip on thin trade as ‘ghost month’ starts

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LOCAL EQUITIES will likely dip this week as investors maintain a cautious stance at the official start of the so-called “ghost month.”

The bellwether Philippine Stock Exchange index (PSEi) dropped by 0.69% or 56.02 points to 8,016.73 at the close of Friday’s trading session.

The all-shares index likewise lost 0.54% or 26.05 points to 4,743.84.

“The market will most likely continue moving downward for the week. Support is pegged at 7,850 and as long as this level holds, the market will continue moving in consolidation,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message over the weekend.

“This also makes 8,100 a formidable barrier for the market,” Mr. Lisbona added.

“Volumes could thin…with the start of the Chinese ghost month, with majority on cautious mode over political headlines,” online brokerage 2TradeAsia.com said in a weekly market note.

Value turnover went down to as low as P4.79 billion last week, which analysts attributed to the seasonally weaker trading because of the ghost month.

The ghost month is a period in the Lunar calendar when some Asian investors refrain from doing big investments or decisions that coincides with the vacation of fund managers in the West, thereby resulting in lower trading volumes. For this year, the period is scheduled to start today and end by Sept. 19.

The release of second-quarter gross domestic product (GDP) figures last week however allowed the PSEi to move closer to its two-year high of 8,127.48 notched last April 10, 2015 as it closed at 8,072.75 last Thursday.

The Philippine Statistics Authority reported last Thursday that the economy grew by 6.5% in the April to June period, faster than the 6.4% growth seen in the first quarter, albeit slower than the 7% recorded in the same period last year.

“Following the release of 2Q17 (second quarter 2017) GDP of 6.5%, attention is set on (the second half)’s momentum, especially for consumption and government spending,” 2TradeAsia.com said in its note.

The brokerage noted that the 5.9% growth in consumption as well as 7% rise in government spending for the second quarter was encouraging, with services seen to accelerate in the fourth quarter driven by remittances and imports.

“We see the Duterte administration within our growth outlook of 6.8%-7% this year, as the market responds positively to the expected approval of Tax Reform Acceleration & Inclusion program, providing higher base for disposable income & saving,” 2TradeAsia.com said.

The brokerage added that investors will watch out for the declaration of cash dividends by PLDT, Inc. and Manila Electric Co. during the course of the week given the lack of leads.

2TradeAsia.com placed the PSEi’s immediate support within a range of 7,0230 to 7,050, with resistance between 8,080 to 8,100.  — Arra B. Francia

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