Looking Back on the Philippine Stock Exchange Index #PSEi
Trading Edge’s Ron Acoba, CMT joins Dr. Danie Laurel in today’s edition of OneNews’ BusinessWorldLive to discuss the #PSEi and #MWC. “The PSEi on a YTD basis is up 4.2% to close at just above 7800 as of yesterday. If you look at its chart, you can see that the index pretty much just traded sideways but in a very choppy manner between 7509 and 8200. What Trading Edge found, though, is that this movement is not isolated in the PSEi. Vietnam, for example, even if it us up by 7.6% also exhibited a choppy sideways movement since the start of the year. Indonesia which is up 2.24%, Malaysia which us up 3.87% and Thailand which is up 2.3%, all did the same. This essentially tells us that this is a regional phenomenon. Of course, the key catalysts that led to such movement has been the US-China trade war and the three waves of MSCI selling that the EM saw to accommodate China. Interestingly enough, despite all the noise about the trade war, the US equity markets are still on all time highs. This tells us that investors are in the position that either way, whether there will be a trade deal or not, the US will still come out on top.
Going back to the PSEi, while the index has so far respected its 7545-7600 support, I have observed that its recent rally was only due to year-end window dressing. My concern us that when trading normalizes at the start of 2020, there’s a possibility that the index breaks below 7500. That event may then drive it to its next key floor at the 6800-7000 area. Now looking at its long term chart, I should say that it is imperative for the PSEi to keep its head above 6800-7000. Otherwise, it will then be in danger of entering a prolonged bear trend. Catalysts to look forward to in 2020 are the progress of the trade war and the US presidential elections. But given that there will be an election in November, I believe that it is in the best interest of Trump to finally enter into a deal with China. At least a short run global rally, therefore, may follow. Meanwhile, MWC remains to be in a major bear trend despite its recent rally. It actually needs to consolidate and base before it can have a more sustainable rally. As for my picks for 2020, I don’t have anything in particular but if I have to choose, I’d still go for the 2019’s best performers. While some may argue that they are already “expensive” and there are other stocks which are substantially “cheap,” I’d still expect funds to continue to flow into to these relative ‘winners’ (#RLC, #JGS, #SM, #SMPH, #BDO).” 12.27.19
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*Consensus target price or average target price given by the major foreign and local brokers of various stocks on top of index names are available in our Equity Advisor!
