PSEi seen trading sideways

Philippine shares are expected to trade sideways next week as investors await the US Federal Reserve’s next move, but some positive factors could help boost market confidence.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., sees the Philippine Stock Exchange index (PSEi) staying at the 5,800 to 5,900 levels.

Investors expect the American central bank to announce a rate cut, which could be beneficial for emerging markets such as the Philippines.

The Fed is set to announce its latest policy stance on Oct. 29.

Another factor that may provide a boost to local shares is the Bangko Sentral ng Pilipinas’ rate-cut cycle. This might prop up consumer and business spending, according to trading platform 2TradeAsia.

With lower borrowing costs, consumers and businesses are encouraged to spend more, lifting demand for goods and services.

“Technical base case is to hope for the index to hold firm above 6,000 through November, buoyed by resilient remittances and holiday retail upticks,” it added.

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Aside from the potential slash in interest rates, Ricafort also noted softer global crude prices as one of the offsetting positive factors for the PSEi.

However, he said there was a “disconnect” as the stock market index fails to reflect the strength of the Philippine economy and the robust financial performance of listed firms.

Ricafort said the local index has remained stuck at the 6,000 to 7,000 range on a year-end basis for over 13 years.