PSEi faces pressure from global risks, weak foreign inflows
Philippine stocks may remain under pressure this week as escalating geopolitical tensions and slowing foreign investments continue to dampen investor sentiment, according to brokerage firm 2TradeAsia.
In its weekly market outlook for May 18 to 22, the brokerage placed immediate support for the benchmark Philippine Stock Exchange Index (PSEi) at 5,800, while resistance was seen at 6,050 and 6,300.
Michael Ricafort, chief economist at Rizal Banking Commercial Corp., said upcoming catalysts for the United States and global financial markets include the outcome of US President Donald Trump’s trip to China and summit with Chinese President Xi Jinping.
Ricafort said after the meeting, markets are expected to refocus on developments surrounding the Strait of Hormuz, which has been largely closed since the Iran-Middle East war began last Feb. 28,
The disruption has reduced global crude oil, LNG and energy supplies, which account for about 20 percent of world supply, or an estimated 100 million barrels of crude oil per week, according to Aramco.
Investors are also closely watching whether the three-week Israel-Lebanon ceasefire, which was supposed to end last May 14, would be extended. Iran had previously cited the ceasefire extension, among other conditions, as a prerequisite for reopening the strait.
Back home, the PSEi managed to post only a slim gain last week as investors stayed cautious amid renewed global uncertainties.
The PSEi inched up by 0.27 percent week-on-week to 5,976.77, supported mainly by bargain hunting in select heavyweight stocks.
2TradeAsia said energy-dependent economies in Southeast Asia could bear the brunt of heightened volatility, especially with crude oil movements threatening to stoke inflationary pressures.
The firm also warned that rising global bond yields and the unwinding of carry trades may put additional pressure on the peso and limit the Bangko Sentral ng Pilipinas’ room to maneuver on policy easing.
On the domestic front, 2TradeAsia flagged the 31-percent drop in February foreign direct investment inflows as a sign of weakening capital momentum.
The brokerage added that concerns over stagflation, tight liquidity and political noise could continue to weigh on equities, overshadowing corporate earnings growth.
Still, 2TradeAsia said blue-chip financial stocks may provide some stability amid market volatility as investors shift toward more defensive and yield-based plays.
“Bouts of technical weakness can be used to accumulate yield-heavy positions,” it said, adding that patience would remain crucial in a market marked by uncertainty and subdued growth expectations.
