Local equities are expected to move sideways this week, on renewed expectations of a rate hike by the US Federal Reserve.
BDO Unibank Inc. chief investment strategist Jonathan Ravelas said concerns over impending US rate hike came after the US Fed stressed in its meeting last week that risks in the US economy subsided and the labor market was getting tighter.
“This suggest that conditions are getting more favorable for an increase in borrowing costs. A rising US interest rates could also push domestic interest rates higher, especially when inflation is also on the rise,” Ravelas said.
The onset of the so-called ‘ghost month’ could also result in thinner trading volumes in August, analysts said.
Analysts said they would also monitor the release of second-quarter reports of listed company and possible income guidance for the second half of the year.
Telecom companies PLDT Inc. and Globe Telecom Inc. are scheduled to report their second-quarter performance this week. SM Investments Corp. and property unit SM Prime Holdings will also release their second-quarter figures.
The Philippine Stock Exchange index, the 30-company bellwether, dropped 0.8 percent over last week’s five-day market trading to close at 7,963.11 on July 29, while the broader all-share index lost 0.9 percent to 4,750.81, amid profit taking. Despite the loss, the PSEi gained 14.5 percent since the start of the year.
The benchmark index actually closed a 15-month high of 8,100.48 on July 27 before trading lower in the next two days. The market closed at a record 8,127.48 on April 10, 2015.
Analyst expect trading this week to be affected by the release of second-quarter data.
Among the six sectors, the financial, industry and services indices posted week-on-week gains while holding companies, property and mining and oil ended in the red.
Despite the market’s decline, foreign investors remained net buyers of P3.6 billion last week. Since the start of the year, foreign investors were net buyers of P51.2 billion.
Top gainers last week were Cebu Air Inc. which climbed 9.5 percent to P109, Holcim Philippines Inc. which rose 8.1 percent to P16.46 and Security Bank Corp. which advanced 3.8 percent to P219.
Heavy losers were Philex Petroleum Corp. which dropped 8.8 percent to P4, DoubleDragon Properties Corp. which fell 8.1 percent to P57.40 and Asian Terminals Inc. which declined 6.9 percent to P10.48.
Meanwhile, the peso stabilized last week within a range of 47.1 to 47.2 against the US dollar, supported by sustained balance of payments surplus.