Upside for local equities seen this week

Local stocks may test higher ground this first week of December, although volatility is seen to persist as the market tries to brush off corruption-related concerns.

Chinabank Securities Corp. research director Rastine Mackie Mercado said the positive performance of the Philippine Stock Exchange Index (PSEi) last Friday could set the mood for “a possible next leg rally” this week.

But the next data points scheduled for release, particularly the inflation print for November, could trigger fresh volatility.

“Assuming data releases point to a continued softening in the US labor market, and benign Philippine price pressures, then the PSEi could decisively breach the 6,065 to 6,100 resistance level,” the analyst said.

Another factor influencing the potential market swings is the Nov. 30 “Trillion Peso March” anti-corruption rally, according to trading platform 2TradeAsia.

The protests were organized not just in Metro Manila, but also in other regions, like Ilocos, Cordillera Administrative Region, Central Luzon, Calabarzon, Bicol, Western Visayas, among others.

“[This] could spike volatility but underscore long-term reforms badly needed to finally reduce country risk that has plagued equities,” it said in its market report.

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Last week, the index was straddling the 6,000 level amid lingering worries on the Philippine economy, further dampened by the corruption scandal.

But it made a slightly stronger finish on the last trading day after S&P Global Ratings had affirmed the Philippines’ long-term credit rating at BBB+ with a positive outlook, seeing the anemic third-quarter economic growth print as temporary.

2TradeAsia also said the anticipated final rate cut of the Bangko Sentral ng Pilipinas on Dec. 11 would help “buoy confidence, especially on the infra and capital formation side.”