PSEi breaks 7,000 level.. What can we expect and do as local investors?
Written by Dave Joseph Balatbat CWP®, CEPP®, RMP
PSEi breaches 7,000 level for the first time since February.
Philippine shares closed last week Friday in green due to positive economic data, as markets in the region got a boost with more economies reopening. The local market closed higher together with most Asian markets, on growing investor optimism towards the progress made over the reopening of a number of economies across the globe. Also, this recent development was caused by the slowed unemployment rate (from 8.7% last April to 7.7% in May) and the strong rebound by the manufacturing sector in June following the end of the stringent lockdowns in March-April. This development on the 7,000 level suggests a strong foothold towards the coming week/s for our economy.
UPDATE: As of today July 6, 2021, PSEi closed at 6,992.43 down 43.95 points or 0.62%.
What is the PSEi?
The PSEi or Philippine Stock Exchange Index is a benchmark measuring the performance of the Philippine Stock Market. The PSEi is made up of the top 30 listed companies, chosen to represent the general movement of the stock market.
What does this mean for you as a local investor?
Many of us own various instruments which are invested in the local equity markets such as UITFs and Mutual Funds. This performance can be a good indicator of a stronger stance towards a more positive economy pushed by the top listed companies in our local market.
Will this be a continuing trend moving forward?
This small win for our economy does not guarantee a continued upward case for the index. The index needs sustained market action to convince local and international investors for the next breakout. I am seeing the next resistance level at around 7,300 to 7,500 to open the way for new uptrends. As I’ve shared on the recent close today, the index fell by 0.62% from 7,036.38 points yesterday. Some factors for the recent decline include the sentiment brought by the latest report of The Bureau of Treasury on the national government’s outstanding debt which breached the 11-trillion pesos mark as of end-May and the negative regional sentiment caused by the concerns over China’s crackdown on the technology industry.
Strong Case and Hurdle
In my opinion, a strong case to further push the economic recovery is through strong continuation of the nationwide vaccination program especially in the Metro and in provinces with high population and market activity. Infections continue to be at 5,000+ cases daily which is still a big hurdle to overcome producing a somehow stalemate recovery situation.
Economic productivity and travel will continue to be slightly depressed by the rainy season where PAGASA estimates 10–16 tropical cyclones inside the Philippine Area of Responsibility within July-November of this year. Although we are very much used to storms and flooding, we all know how badly these events affect our output as a whole.
What can we do as investors?
- Let’s continue to be cautious, disciplined, and methodical with our actions especially when we plan to go outside of our homes (always keeping in mind the usual health and safety protocols).
- Let’s put first our health and wellness above all so we can continue to fulfill our daily duties and be able to achieve our future goals even in this prolonged crisis.
- Although some may have a different view and I respect that, if you believe in this and it’s available in your local area, please have yourself vaccinated the soonest. I just had my first dose last week and scheduled to have my 2nd by the end of the month. Most countries that we’re able to completely reopen had a good number of their population fully vaccinated.
- If you own an instrument that focuses its holdings in the local market, continue your diligence towards saving additional funds to your account/s whenever you have a surplus so you can own more shares and strengthen your base.
To conclude..
This development is a positive note for our economy and a small victory as we start the 2nd half of the year. I am praying that this trend would continue and eventually help our country start its rally towards recovery!
How can I help you?
I am Certified Wealth and Estate Planner who specializes in helping my fellow Filipinos formulate financial planning strategies and identify instruments available in our local market that can help secure and build their wealth as they progress in their careers and/or businesses.
Your Wealth Planner, Dave
Research Resource: PSEinfo, investagrams.com, the Fast Exchange, Business Mirror, and Rappler-PAGASA Report 2021
