We believe that there is still plenty of upside to the market in the medium to long term, supported by both monetary (upcoming interest rate and RRR cuts) and fiscal (massive government spending) policy. Macroeconomic forecasts also point to benign inflation and robust economic growth in the coming years, which should
underpin corporate earnings. <\/p>\n\n\n\n
However, we are also rapidly approaching a key resistance level around 7,500 and the index ended Monday with an RSI of 81.19 which indicates that our market is already overbought. As such, we expect a short-term correction which may see the index retest its support at break-out point around 7,250. <\/p>\n\n\n\n
This could serve as the next jumping-off point for a rally to our upward revised year-end target of 7,662.<\/p>\n\n\n\n
PSEi closes 20.44% above the latest low<\/strong><\/p>\n\n\n\n The PSE index closed at 7,417.25 earlier this week, marking a 20.44% jump from the last lower-low of 6,158.48 set on the close of June 21. This satisfies the technical definition of a bull market, which is a 20% increase from the last trough.<\/p>\n\n\n\n A trickle of foreign flows hits the parched land<\/strong><\/p>\n\n\n\n The local stock market has enjoyed net foreign inflows in 30 out of the past 31 days, one of the longest stretches of net foreign flows in recent memory. It started as a trickle ahead of the BSP meeting on August 15 where the Monetary Board cut interest rates by 25bps, before increasing into a steady flow since then. <\/p>\n\n\n\n The net foreign flows accelerated further following the September 19 jumbo rate cut from the US Federal Open Market Committee, as falling bond yields in the United States triggered a rush into emerging market bonds and stocks which offer higher yields. <\/p>\n\n\n\n Bloomberg data show that inflows into US-listed emerging market ETFs totaled $560.7-Million in the week ending on September 20, a reversal of the nearly $200-Million in outflows the previous week. The Philippines caught a tiny trickle of these flows, ranking 6th in foreign inflows in developing Asia-Pacific, but it was enough to drive the market into bull territory.<\/p>\n\n\n\n Still net foreign sell YTD, but rapidly rising back to positive territory<\/strong><\/p>\n\n\n\n Foreign investors are still net selling of P8.9-Billion on a year-to-date (YTD) basis, but with accelerating net foreign inflows, it is likely that we will be back in the positive by year-end. <\/p>\n\n\n\n On a per stock basis, 15 index names saw net foreign inflows YTD while 19 names saw net foreign inflows since the start of August. MBT, BPI, BDO, ICT, and SM topped net inflows YTD, while URC, AEV, ALI, SMPH, and EMI saw the largest net outflows for the same period. BDO, ALI, MBT, SM, and JFC topped the list of net foreign inflows since August, while URC, SMC, BLOOM, JGS, and ACEN saw the largest net outflows.<\/p>\n\n\n\n