First Metro Weekly Equities and Economic Outlook – January 15 – 19, 2018

Market Outlook. PSEi likely to trade within the 8,800-8,950. Watch out for the full-year 2017 gross domestic product (GDP) today.

Drivers. Above-expectations GDP may push the local bellwether above 9,000. Profit-taking may be towards weekend with overbought market; 70 relative
strength index.

Market Review. Market rally on its seventh weekly gain and all-time high, up by 1.15% week-on-week (w-o-w) to 8,915.92 on the back of strong foreign buying; Php2.85bn last week; year-to-date level is Php5.97bn. The market was the sixth best performing market w-o-w following Hong Kong (+2.7%), India (+2.7%), Taiwan (+2.5%), Indonesia (+1.9%), and China (+1.7%). Year-to-date (ytd), the market was up 4.2%, sixth best performing following Hong Kong (+7.8%), China (+5.5%), Taiwan (+4.8%), Tokyo (+4.6%), Singapore (+4.3%) and India (+4.3%).

Yesterday, the market touched another intraday high of 8,975.12 and closed in green at 8,950.62, up by 0.39% from last Friday’s close, tracking regional markets’ gains.

Economic Outlook. Foreign portfolio investment (FPI) in 2017 recorded a net outflow of $205.03mn versus 2016’s net inflow of $404.43mn and lower than the Bangko Sentral ng Pilipinas’ (BSP) estimate of $2.5bn net outflows. For December alone, net inflow was at $456.93mn, largest monthly net inflow for the year and a turnaround of last year’s net outflow of $314.65mn. Month-on-month, net inflow was up 324% versus November’s $107.71mn. The drivers were: the ratification of the Tax Reform for Acceleration and Inclusion (TRAIN), credit rating upgrade by Fitch Ratings, government issuance of retail treasury bonds and revision of growth forecasts to 6.7% from 6.6% in 2017 by the World Bank. For 2018, the central bank expects foreign portfolio investments to record a net outflow of $900m.

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