Shares are seen to continue to consolidate this week, while the gap created by the sale was closed last Friday on the last trading day before the rebalancing of the main index.
The Philippine Stock Exchange Index (PSEi) lost a total of 219.72 points or 3.36 percent last week and closed Friday at 6,320.19.
As of today, DMCI and Emperador will be taken out of PSEi and replaced by AC Energy and Converge, whose shares had already risen in recent days.
Meanwhile, the weight of other index components AGI, SMC, SM Investments, Jollibee, URC, AEV, LTG, JG Summit, Ayala Land and ICTSI has also been reduced. The sale on Friday was largely triggered by fund managers adapting to the PSEi rebalancing.
PSEi has not been able to test the 6,700 resistance levels especially now that new COVID-19 infections are rising, according to BDO Unibank chief strategist Jonathan Ravelas.
“The week’s end of 6,320.19 still implies further consolidation within the 6,300 to 6,700 levels in the short term,” Ravelas said.
“However, a sustained break below the 6,300 levels will endanger the 5,700 to 6,000 levels. See this space, ”he added.
This will be the second week of the so-called ghost month, a period in the lunar calendar where trading volume thins out as investors avoid making large ticket investments.
As expected, Bangko Sentral ng Pilipinas kept its interest rates at a record low below its monetary framework last week. The Philippines also reported that the economy grew 11.8 percent year-on-year in the second quarter, but fell 1.3 percent from the first quarter due to new lockdowns.
The think tank Fitch Solutions revised its forecast for growth in gross domestic product for the Philippines this year to 4.2 percent from 5.3 percent.
“The economy will be subject to continued disruption from the COVID-19 pandemic due to its slow vaccination rate and difficulty in outbreaks. With only 9.9 percent of the population fully vaccinated by August 5, the country is still far from reaching herd immunity, so it can facilitate preventative measures more significantly, ”said Fitch Solutions.
“The shutdown of Metro Manila in August and the increased threat from the more contagious Delta variant have led us to lower our expectations for domestic activity through the second half of 2021,” it added.
—Doris Dumlao-Abadilla INQ
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