Oil, weak peso cloud PSEi bid for 6,000

The Philippine Stock Exchange Index (PSEi) may struggle to regain the 6,000 level this week as high oil prices, a weak peso and tighter liquidity keep investors on edge.

F. Yap Securities Inc. said the local market would continue to face external headwinds after the US Federal Reserve (Fed) raised its benchmark rate by 25 basis points last week.

The Fed’s unanimous decision also strengthened expectations of another increase before year-end.

F. Yap said in its outlook for Sept. 21 to Sept. 25 that the peso briefly touched a record low of 62.86 against the dollar amid a widening oil import bill and the Fed’s hawkish stance.

Oil prices are another pressure point. West Texas Intermediate crude has climbed from the low-$80-per-barrel range in August to around $93 to $94, while Brent has breached $98 as the conflict involving Iran drags on.

F. Yap said elevated oil prices could add upside risks to September and October inflation.

Domestic liquidity could also become a bigger concern heading into the fourth quarter as investors prepare for two major listings.

F. Yap said the roughly P24-billion inital public offering of VITRO REIT and the nearly P92-billion offering of GCash operator Mynt could absorb a “meaningful amount” of investible cash that would otherwise flow into secondary-market trading.

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Elevated bond yields could further compete with equities for investor funds.

The brokerage noted that 10-year treasury bond yields were at around 7.3 percent to 7.5 percent, while short-tenor Treasury bills were in the mid-5-percent range.

Against this backdrop, F. Yap expects trading volumes to remain thin through the end of the quarter.