PSEi still vulnerable to selloffs
Credit to Author: ANGELICA BALLESTEROS, TMT| Date: Sun, 19 May 2019 16:38:01 +0000
THE stock market remains susceptible to selloffs this week as trade tensions between the United States and China continue to worsen, according to an analyst.
In a comment over the weekend, Eagle Equities Inc. research head Christopher Mangun said the local market “is not out of the woods yet,” despite Friday’s market rally, caused by the central bank’s policymaking Monetary Board’s decision to cut banks’ reserve requirement ratio (RRR) by 200 basis points.
“The reality is, the US-China trade war has a minimal effect on our economy, but the gloom and doom from investors across the globe has taken its toll on foreign and local investors in the PSE (Philippine Stock Exchange),” Mangun explained.
“We may continue to see foreign funds flow out of the market,” he said.
In a separate comment, online brokerage firm 2tradeasia.com said the resumption of the House of Representatives’ regular sessions, particularly to tackle pending economic bills — primarily the Tax Reform for Attracting
Better and Higher-Quality Opportunities (Trabaho) measure — would be in the spotlight this week.
The second package of the government’s Comprehensive Tax Reform Program, Trabaho aims to reduce the corporate income tax rate from 30 percent to 20 percent in 10 years and rationalize fiscal incentives.
“Specific sectors may also take center stage, which includes mining and exploration, REITs (real estate investment trust) for property, [and] utilities,” 2tradeasia.com said.
“Investors would also check how [the] government would map out its timeline on infrastructure rollout, with the onset of the rainy season in the third quarter,” it added.
“Accelerated construction pace appears more likely in the fourth quarter, especially with more funds available for lending from the BSP’s (Bangko Sentral ng Pilipinas) three-phased cut in reserve requirement,” it added.
According to the central bank, an initial 100-bps RRR reduction will take effect on May 31, followed by a 50-bps cut on June 28 and another 50-bps decrease by July 26.
Last Friday, the benchmark Philippine Stock Exchange index grew by 1.45 percent or 108.66 points to close at 7,583.82, while the broader All Shares rose by 1.08 percent or 50.41 points to end at 4,713.27.
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