Local stocks break out of 7,000 PSEi; tests 7,200 points

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Before the onset of the long weekend, the Philippine Stock Exchange index (PSEi) last week added 124.58 points or 1.78 percent to close at 7,133.09 on Friday.

Trading resumed onTuesday, which also marked the first day of exchange at the close of the Chinese “ghost month.” Financial markets were closed Monday in observance of National Heroes Day.

Meanwhile, on the heels of an uptrend in Philippine growth prospects for the second quarter and favorable offshore data, the local stock barometer is seen retesting the 7,200 levels in the short run. This, even as growth prospects are becoming all the more susceptible to profit-taking.

Alexander Adrian Tiu, market analyst from AB Capital Securities, said that in a climate of bullish economic prospects for the Philippines and the United States, the local second-quarter earnings season yielded mixed results, with several consumer stocks such as Puregold and Alliance Global Group falling short of analyst’s expectations.

“Given this, we expect the local bourse to normalize in the coming weeks as the earnings season effect wanes,” he said.

Tiu added that the release of Philippine second-quarter GDP (gross domestic product) growth results on Thursday is expected to impact the week’s market activity.

“On a technical basis, the index recently broke out from its resistance at 7,000 points, with near-term upside at 7,200. Despite the bullish optimism in the short-term, we express caution on a possible pullback near the 7,000 support level if it fails to breach the aforementioned resistance,” Tiu said.

“Given this, investors are advised to prudently take profits and cautiously accumulate at more bargain prices,” he noted.