PCOMP’s Back to the 7700 Level: Courtesy of Moody’s Upgrade on PH’s GDP Forecast?

PCOMP’s Back to the 7700 Level: Courtesy of Moody’s Upgrade on PH’s GDP Forecast?

Moody’s has revised its growth forecast for the Philippines from its previous 6.2% estimate to 6.5%. Forecast for 2017 was also revised from an estimate of 6% to 6.5%. This would be 60 basis points up from the 5.9% growth registered in 2015.

The bullishness of local demand, especially the consumer expenditure, is seen as a strong support against international economic noises and to the growth of remittance over the next 2 years.

The country has sound economic and fiscal policies, slow and stable inflation, plus a pick up in public spending in the first half of the year.

There is also minimal risks in the local banking system and from external developments.

The Philippines currently enjoy a “Baa2” rating from Moody’s since 2014, a notch above the minimum investment grade, which means the country can still borrow at lower costs than the time before investment grade was awarded to the country.

Duterte’s verbal attacks on the United States and his overwhelming rhetoric haven’t departed from his administration’s 10-point socio-economic agenda nor any reversal in foreign policy.

Investors may fund comfort in the administration’s 10-point socio-economic agenda that focus on cutting taxes, improving revenue collection efficiency and raising infrastructure spending, and attracting more foreign investments.

Finance Secretary, Carlos G. Dominguez III, expects that upon implementing the administration’s tax reform program, collections over a 3-year period would be around 566.4B pesos, which would yield a net cumulative collection of 368.1B pesos after deducting 198.3B pesos foregone revenues.

This recent development has affected PSE today on an upward bias. I’d like to give you an overview of what transpired today. Let’s talk about the Philippine Stock Exchange Index (PSEi).

In this Daily Chart, we see that PSEi succeeded in breaching the then support near 7,670. PSEi managed to stay in a bullish stance on a long-term perspective as it continues to move above its 200-day SMA. On a short-term perspective, I cannot say that PSEi is in a confirmed bullish state. I prefer to see the 10-day SMA crossing above the 20-day SMA (golden cross), with the MACD moving above the signal line and foreign investors registering a Net Foreign Buying, to confirm the bullish position of PSEi on a short-term basis.

PCOMP - Daily Chart - October 19, 2016

I’d like to take you to the 15 Minute intraday chart of PSEi. You can see that PSEi was bullish from opening till closing. Trend-wise, there are no visible signs of a struggle.

PCOMP - 15 Minute Chart - October 19, 2016

Foreign investors broke the 10-day Net Foreign Selling streak today worth P1,066,438,000.00. However, on a 30-day trading period, PCOMP is still on a Net Foreign Selling worth PHP11,365,117,000.00.

PCOMP - Foreign Fund Flow - October 19, 2016

PCOMP’s volume has been moving below its 30-day volume average for 4 trading days already.

PCOMP - Volume - October 19, 2016

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Jaycee De Guzman

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