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PSEi to move sideways on profit taking, BSP meet

By Revin Mikhael D. Ochave, Reporter

SHARES are expected to move sideways this trading week as investors pocket their profits while they await the central bank’s decision at its first policy meeting for the year.

The benchmark Philippine Stock Exchange index (PSEi) ended at 7,019.18 on Friday, higher by 115.43 points or 1.67% from its previous close of 6,903.75.

On a weekly basis, the main index likewise improved by 406.56 points or 6.15%.

The market’s average turnover fell 4.08% to P9.97 billion last week, while average net foreign selling declined 60.18% to P528.12 million.

Timson Securities, Inc. Head of Online Trading Darren Blaine T. Pangan said in a mobile phone message that the market is projected to move sideways this week as investors are seen to book their profits ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting.

“Investors may be waiting for more earnings reports to be released, as well as taking into consideration the interest rate decision to be announced this week,” Mr. Pangan said.

The central bank’s policy-setting Monetary Board is scheduled to have its first meeting for the year on Feb. 11, Thursday.

The central bank will likely maintain benchmark interest rates when it revisits its policy settings this Thursday, according to 17 out of 18 analysts in a BusinessWorld poll held last week.

Analysts said going further into the negative real interest rate territory may cost more damage than benefits at this point, noting that fiscal policies may be more advantageous to quell soaring inflation.

The overnight reverse repurchase or key policy rate is currently at two percent, well below the 4.2% inflation print in January.

The BSP slashed the rates on its overnight reverse repurchase, lending, and deposit facilities by 200 basis points last year, bringing them to record lows.

Online brokerage 2TradeAsia.com said the local bourse will be tested in the coming trading week due to increased volatility caused by the release of earnings reports.

“The PSEi showed a strong return to the 7,000 level, but its staying power will be tested, given heightened volatility from the upcoming earnings season,” 2TradeAsia.com said in a market note.

“Globe Telecom, Inc. will be the first to report fiscal year 2020 earnings next week, but other index names are expected to follow suit for the remainder of February until March,” it added.

2TradeAsia.com said the market’s immediate support is seen at 6,900, secondary at 6,820, and its resistance at the 7,150 to 7,200 level.

“The market may eventually retest its nearest resistance at 7,300, with 6,600 being considered the major support area,” Timson Securities’ Mr. Pangan said.

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