Market readies for Santa Claus rally in Philippines

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The Philippine stock market is traditionally strong in December with the usual Santa Claus rally.

Analysts said this year may see the usual rally again although it would depend largely on inflation.

'A growing number of investors are piecing together a picture of a potentially good December for stocks. That narrative will be tested this week as the market turns its focus to the Philippine November inflation print and US October jobs data,' said Juan Paolo Colet, managing director at China Bank Capital Corp.

Investors are also waiting for inflation to cool down and for the slowdown to be sustained.

'A sustained slowdown in local inflation could persuade the Bangko Sentral ng Pilipinas (BSP) to keep its policy rate steady when the Monetary Board meets next week. Meantime, signs of a cooling US jobs market would strengthen the view that the Federal Reserve is done with its rate hike campaign. Both outcomes should be positive for equities,' Colet said.

The BSP expects inflation to hover at around four to 4.8 percent, slightly lower than October's 4.9 percent print.

Moving forward, Colet said the market may see continued consolidation in the 6,200 to 6,300 level, and could potentially make an attempt for 6,380 in case of positive news flows.

Last week, the benchmark Philippine Stock Exchange index (PSEi) closed lower by 24 points to 6,245 or down by 0.39 percent week-on-week.

Save for property, which was up by 2.08 percent, most counters dropped led by industrials and financials.

Average turnover, however, improved to P5.85 billion or up by 75.43 percent week-on-week. Similarly, net foreign selling improved to P484 million or up 142 percent week-on-week.

For this week, 2TradeAsia said it would be another four-day trading week, but noted that the release of the November inflation numbers will likely bring some excitement into the market.

'At current levels, the PSEi is finding more fuel to hopefully end in the green. Some positive news on the macro side could provide some short-term inspiration. Accumulate gradually. Immediate support is seen at 6,100 to 6,150 with resistance at 6,400,' it said.