Report: RP stocks near-term momentum waning

Friday’s close of the Philippine Stocks Exchange index indicated that the near-term momentum is "waning," according to the weekly report of Banco de Oro Unibank Inc. After firming up for over a week, the PSEi has started to drop since Thursday. It closed at 3,442.68 points Friday. "Expect some weakness towards the test of 3,350-point to 3,400-point levels. If said levels hold, a retest of the 3,450-point to 3,470-point levels may occur," chief market strategist Jonathan Ravelas said in the report. "Failure for the market to stay above the 3,350-point level could imply further losses towards the 3,150-point to 3,250-point levels," he added. The boost of local stocks early last week meant that the "risk aversion continued to wane following strength in global equity markets lifting investor sentiments," the report said. Peso-dollar The weekly forecast noted that the peso against the US dollar will trade between 46.20 to 46.70 this week. "Breach of the 46.70 level will trigger start of peso depreciation," Ravelas said. The local currency moved sideways week-on-week as the market remains indecisive on the direction of exchange rate, the report said. "The dollar significantly decreased against the major currencies especially against the Euro which is around 1.29… but this was not enough to buoy local currency to breach 46 level as investors and traders expect the Bangko Sentral ng Pilipinas to keep rates unchanged for the rest of the year." Interest rates, meanwhile, would move sideways next week, according to the report. Secondary market rates moved down by an average of 4 basis points week-on-week Friday after the BSP kept its key rate unchanged at 4 percent. Monetary authorities are ready to adjust monetary policy as needed following appearance of upward pressure on prices, according to the report. The policy makers did not follow their counterparts in Malaysia, India, Thailand and South Korea in increasing interest rates. —VS, GMANews.TV